Q2 2025 Dell Technologies Inc Earnings Call

August 29, 2024

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Unknown: --Technology's fiscal year 2025 second quarter results call. At this time, we are still admitting additional participants and plan to be underway shortly. We appreciate your patience and ask that you please remain on the line.

Speaker Change: Thank you for standing by. You are currently on hold for the Dell Technologies fiscal year 2025 second quarter results call.

Speaker Change: At this time, we are still admitting additional participants and planned to be underway shortly.

Operator: Good afternoon, and welcome to the Fiscal Year 2025 Second Quarter Financial Results Conference Call for Dell Technologies, Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies, Inc. Any rebroadcasting of this information in whole or part without the prior written permission of Dell Technologies is prohibited. Following prepared remarks, we will conduct a question-and-answer session. If you have a question, simply press star then 1 on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Speaker Change: and we appreciate your patience and ask that you please remain on the line.

Speaker: Good afternoon and welcome to the fiscal year 2025 second quarter financial results conference call for Dell Technologies Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies Inc. Any rebroadcasting of this information in whole or part without the prior written permission of Dell Technologies is prohibited. Following, following prepared remarks, we will conduct a question and answer session. If you have a question, simply press star then one on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Speaker Change: i

Speaker Change: Good afternoon and welcome to the fiscal year 2025, second quarter from the International Results Conference Call for Dell Technologies Inc. I'd like to inform all participants this call is being recorded at the request of Dell Technologies.

Speaker: I'd like to inform all participants this call is being recorded at the request of Dell Technologies. This broadcast is the copyrighted property of Dell Technologies Inc. Any rebroadcasting of this information in whole or part without the prior written permission of Dell Technologies is prohibited. Following, following prepared remarks, we will conduct a question and answer session. If you have a question, simply press star then one on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Speaker Change: The subroadcast is the copyrighted property of Dell Technologies Inc. Any rebroadcasting of this information in whole or part without the prior written permission of Dell Technologies is prohibited.

Speaker: Following, following prepared remarks, we will conduct a question and answer session. If you have a question, simply press star then one on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Speaker Change: Following, following prepare remarks, we will conduct a question and answer session. If you have a question, simply press star then one on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, head of investor relations. Mr. Williams, you may begin.

Rob Williams: I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Rob Williams: Mr. Williams, you may begin. We covered on today's call. During this call, unless otherwise indicated, all references to financial measures refer to non-gap financial measures, including non-gap gross margin, operating expenses, operating income, net income, diluted earnings for share and adjusted pre cash flow.

Jeff Clarke: Thanks to everyone for joining us with me today or Jeff Clarke to Von McGill and Tyler Johnson.

Rob Williams: Our earnings materials are available on our IO website and I encourage you to review these materials and the presentation, which include additional content to complement our discussions afternoon.

Rob Williams: Guidance will be covered on the day's call.

Rob Williams: During this call, unless otherwise indicated, all references to financial measures refer to non-gap financial measures, including non-gap gross margins, operating expenses, operating income, net income, diluted earnings per share, and adjusted free cash flow.

Rob Williams: A reconciliation of these measures to their most directly comparable gap measures can be found on our web deck and our press release. Growth percentages refer to year-over-year change unless otherwise specified. Statements made during this call that related to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties which are discussed in our web deck and our SEC filings. We assume no obligation to update our forward-looking statements.

Rob Williams: Reconciliation of these measures to the most correctly comparable got measures can be found in a web deck and our press release.

Rob Williams: Great percentages refer to year over year change unless otherwise specified.

Daymonds Mays: Daymonds Mays during this call that relates to future results in events or forward-looking statements based on current expectations.

Daymonds Mays: Actual results in events could different materially from those projected due to a number of risks and uncertainties which are discussed in our web deck and our SEC filings. We assume no obligation to update our board-looking statements.

Operator: Following prepared remarks, we will conduct a question-and-answer session. If you have a question, simply press star then 1 on your telephone keypad at any time during the presentation. I'd like to turn the call over to Rob Williams, Head of Investor Relations. Mr. Williams, you may begin.

Jeff: Now I'll turn it over to Jeff.

Jeffrey W. Clarke: Thanks, Rob, and thanks everyone for joining us. We executed well in Q2, and I'm really proud of our team and our performance. Revenue was $25 billion, up 9%, with another record for our servers and networking business. Diluted EPS was $1.89, up 9%, and cash-flow from operations was $1.3 billion. Our AI momentum accelerated in Q2 and our results and outlook demonstrate that we are uniquely positioned to help customers leverage the benefits of artificial intelligence. In ISG, our AI server orders and shipments increased again sequentially. Our unique capability to deliver leading-edge air and liquid cooled AI servers, networking and storage tuned and optimized for maximum performance at the node and rack level combined with leading ecosystem partners and world-class services and support continues to resonate with customers. Orders demand was $3.2 billion, primarily driven by Tier-2 cloud service providers. Encouragingly, we continue to see an increase in the number of enterprise customers buying AI solutions each quarter. Enterprise remains a significant opportunity for us as many are still in the early stages of AI adoption. We are also excited about the emerging sovereign AI opportunity, which plays to our strengths given our position with governments around the world. We shipped $3.1 billion of AI servers in Q2. As we exited the quarter, our AI server backlog remains healthy at $3.8 billion.

Daymonds Mays: Now I'll turn it over to Jeff.

Jeff Clarke: Thanks Rob and thanks to everyone for joining us.

Mr. Williams, you may begin.

Jeff Clarke: We executed Well and Q2 and I'm really proud of our team and our performance. Revenue was $25 billion of 9% with another record for our servers and networking business.

Rob Williams: Thanks, everyone, for joining us. With me today are Jeff Clarke, Yvonne McGill and Tyler Johnson. Our earnings materials are available on our IR website, and I encourage you to review these materials and the presentation, which includes additional content to complement our discussion this afternoon. Guidance will be covered on today's call. During this call, unless otherwise indicated, all references to financial measures refer to non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release. Growth percentages refer to year-over-year change unless otherwise specified. Statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our web deck and our SEC filings. We assume no obligation to update our forward-looking statements. Now, I'll turn it over to Jeff.

Jeff: Networking Business. Deluted EPS with $1.89 up 9% and cash flow from operations was $1.3 billion. Our AI momentum accelerated in Q2 and our results in Outlook demonstrate that we are uniquely positioned to help customers leverage the benefits of artificial intelligence. In ISG, our AI server orders and shipments increased again sequentially. Our unique capability to deliver leading edge air and liquid-cooled AI servers. Networking and storage tuned and optimized for maximum performance at the node and rack level combined with leading ecosystem partners and world-class services and support continues to resonate with customers. Order's demand was $3.2 billion primarily driven by Tier 2 cloud service providers. Encouragingly, we continue to see an increase in the number of enterprise customers buying AI solutions each quarter. Enterprise remains a significant opportunity for us as many are still in the early stages of AI adoption. We are also excited about the emerging sovereign AI opportunity which plays to our strengths given our position with governments around the world. We shipped $3.1 billion of AI servers to Q2. As we exited the quarter, our AI server backlog remains healthy at $3.8 billion.

Speaker Change: Deluded EPS for the dollar 89, up 9% and cash flow from operations was $1.3 billion.

Speaker Change: Our AI momentum accelerated in Q2 and our results in Outlook demonstrate that we are uniquely positioned to help customers leverage the benefit of artificial intelligence.

Rob Williams: During this call, unless otherwise indicated, all references to financial measures refer to non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating income, net income, diluted earnings per share and adjusted free cash flow. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and our press release. Growth percentages refer to year-over-year change unless otherwise specified.

Speaker Change: and IISG are AI server orders and shipments increased again to clinchly. Are you need capability to deliver leading edge air and liquid cool AI servers?

A reconciliation of these measures to their most directly comparable gap measures can be found on our web deck and our press release.

Speaker Change: Networking and Storage, tuned and optimized for maximum performance at the node and Iraq level, combined with leading ecosystem partners and world class services and support continues to resonate with customers.

Rob Williams: Growth percentages refer to year-over-year change unless otherwise specified. Statements made during this call that related to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties which are discussed in our web deck and our SEC filings. We assume no obligation to update our forward-looking statements. Now I'll turn it over to Jeff.

Jeff: Order's demand was $3.2 billion primarily driven by Tier 2 cloud service providers. Encouragingly, we continue to see an increase in the number of enterprise customers buying AI solutions each quarter. Enterprise remains a significant opportunity for us as many are still in the early stages of AI adoption. We are also excited about the emerging sovereign AI opportunity which plays to our strengths given our position with governments around the world. We shipped $3.1 billion of AI servers to Q2. As we exited the quarter, our AI server backlog remains healthy at $3.8 billion.

Rob Williams: Statements made during this call that relate to future results and events are forward-looking statements based on current expectations. Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our web deck and our SEC filings. We assume no obligation to update our forward-looking statements. Now, I'll turn it over to Jeff.

Speaker Change: Order's demand was $3.2 billion primarily driven by Tier II cloud service providers.

Speaker Change: And courageingly, we continue to see an increase in the number of enterprise customers by AI solutions each quarter. Enterprise remains a significant opportunity for us, as many are still in the early stages of AI adoption. We're also excited about the emerging sovereign AI opportunity.

Speaker Change: which plays to our strength given our position with governments around the world. We shipped $3.1 billion of AI servers to Q2.

Jeff: As we exited the quarter, our AI server backlog remains healthy at $3.8 billion. Most exciting, our AI server pipeline expanded across both Tier 2 CSPs and enterprise customers again in Q2 and now has grown to several multiples of our backlog. As we begin the second half of the year, we have optimized ourselves coverage to better focus on AI opportunities across CSPs and both large and small customer segments and geographies. In addition, we have added substantial engineering capabilities including data center networking and design to support these AI pursuits.

Speaker Change: as we accident the quarter.

Speaker Change: Our AI server backlog remains healthy at $3.8 billion.

Speaker Change: Most exciting are AI Server Pipeline expanded across both Tier 2 CSPs.

Speaker Change: and Enterprise Customers again in YouTube and now has grown to several multiples of our backlog.

Speaker Change: As we begin the second half of the year, we have optimized our sales coverage to better focus on AI opportunities across CSP's. And both large and small customer segments and geographies.

Speaker Change: In addition, we have added substantial engineering capabilities, including data set or networking and design to support these AI pursuits.

Jeff: Traditional server demand continues to improve and we saw strong demand again in Q2. Our third consecutive quarter of growth and our fifth consecutive quarter sequentially as customers invest in both traditional and AI infrastructure. Dell IP core storage demand including PowerMax, PowerScale, PowerStore, and PowerProtect DataDemain grew double digits in the quarter, a positive sign as we move into the second half of the year. In CSG, we saw modest commercial PC demand growth in the quarter with healthy operating profitability and we expect growth in the second half of the year.

Speaker Change: Traditional server demand continues to improve, and we saw strong demand again in YouTube. Our third consecutive order of growth, and our fifth consecutive order sequentially, that's customers invest in both traditional and AI infrastructure.

Speaker Change: Dell IP core storage demand, including PowerMax, PowerScale, PowerStore, and PowerProtect data domain, we've doubled digits in the quarter. A positive sign as we move into the second half of the year.

Jeffrey W. Clarke: We are also excited about the emerging sovereign AI opportunity, which plays to our strengths given our position with governments around the world. We shipped $3.1 billion of AI servers in Q2. Most exciting, our AI server pipeline expanded across both Tier-2 CSPs and enterprise customers again in Q2, and now has grown to several multiples of our backlog. As we begin the second-half of the year, we have optimized our sales coverage to better focus on AI opportunities across CSPs, and both large and small customer segments and geographies. In addition, we have added substantial engineering capabilities, including data center networking and design to support these AI pursuits. Traditional server demand continues to improve and we saw strong demand again in Q2, our third consecutive quarter of growth and our fifth consecutive quarter sequentially as customers invest in both traditional and AI infrastructure.

Speaker Change: and CSG, we saw modest commercial PC-demand growth in the quarter with healthy populating profitability.

Jeff: In CSG, we continue to pursue profitable share of focusing on commercial PCs, high end consumers, and gaming with our strong attached motion. We are optimistic about the coming PC refresh cycle. As the install base continues to age, Windows 10 reaches end of life later next year and the significant advancements in AI enabled architecture and applications continue. In closing, we are urging our strengths to extend our leadership positions and lean into new opportunities like AI. We are offering customers choice, flexibility, and control of how and where they build, train, and run part of official intelligence. We are still in the early innings in our AI opportunity with peer-to-CSP's enterprise and emerging sovereign customers is immense. Our view is supported by an AI hardware and services tab of $174 billion, up from $152 billion, growing at a 22% cager over the next few years. We are competing in all of the big AI deals in our winning significant deployments at scale.

Gene: and we expect growth in the second half of the year and see as Gene we continue to pursue profitable share focusing on commercial PCs, high end consumer and gaming with our strong attach motion.

As we exited the quarter, our AI server backlog remains healthy at $3.8 billion.

Most exciting, our AI server pipeline expanded across both Tier 2 CSPs and enterprise customers again in Q2 and now has grown to several multiples of our backlog. As we begin the second half of the year, we have optimized ourselves coverage to better focus on AI opportunities across CSPs and both large and small customer segments and geographies. In addition, we have added substantial engineering capabilities including data center networking and design to support these AI pursuits. Traditional server demand continues to improve and we saw strong demand again in Q2. Our third consecutive quarter of growth and our fifth consecutive quarter sequentially as customers invest in both traditional and AI infrastructure.

Speaker Change: We are optimistic about the coming PC or fresh cycle. As the install base continues to age, Windows 10 reaches end of life later next year, and the significant advancements in AIID will architectures and applications continue.

Jeff: In closing, we are urging our strengths to extend our leadership positions and lean into new opportunities like AI. We are offering customers choice, flexibility, and control of how and where they build, train, and run part of official intelligence. We are still in the early innings in our AI opportunity with peer-to-CSP's enterprise and emerging sovereign customers is immense. Our view is supported by an AI hardware and services tab of $174 billion, up from $152 billion, growing at a 22% cager over the next few years. We are competing in all of the big AI deals in our winning significant deployments at scale.

Speaker Change: In closing, we are leveraging our strengths to extend our leadership positions and lean into new opportunities like AI.

Speaker Change: We are offering customers' choice, flexibility, and control of how and where they build, train and run a part of Fishland Intelligence.

Speaker Change: We are still in the early innings in our AI opportunity with two CSTs Enterprise and emerging sovereign customers is immense.

Traditional server demand continues to improve and we saw strong demand again in Q2. Our third consecutive quarter of growth and our fifth consecutive quarter sequentially as customers invest in both traditional and AI infrastructure.

Speaker Change: Our view is supported by an AI hardware and services tam of a hundred and seventy-four billion dollars up from a hundred and fifty-two billion dollars. Growing at a twenty-two percent tager over the next few years.

Jeffrey W. Clarke: Dell IP core storage demand, including PowerMax, PowerScale, PowerStore and PowerProtect Data Domain grew double-digits in the quarter, a positive sign as we move into the second-half of the year. In CSG, we saw modest commercial PC demand growth in the quarter with healthy operating profitability and we expect growth in the second half of the year. In CSG, we continue to pursue profitable share focusing on commercial PCs, high-end consumer and gaming with our strong attach motion. We are optimistic about the coming PC refresh cycle, as the installed base continues to age, Windows 10 reaches end-of-life later next year and the significant advancements in AI-enabled architectures and applications continue. In closing, we are leveraging our strengths to extend our leadership positions and lean into new opportunities like AI. We are offering customers choice, flexibility and control of how and where they build, train and run artificial intelligence. We are still in the early innings, and our AI opportunity with Tier-2 CSPs, enterprise and emerging sovereign customers is immense. Our view is supported by an AI hardware and services TAM of $174 billion, up from $152 billion, growing at a 22% CAGR over the next few years. We are competing in all of the big AI deals and are winning significant deployments at scale.

Jeff: We are competing in all of the big AI deals in our winning significant deployments at scale. Progress will not always be linear in the early stages, but we are winning in the market with strong feedback from our customers while acquiring new customers every quarter. We have the right AI portfolio with more to come, the right services capabilities, and we are optimizing our sales coverage to capture this once-in-a-generation opportunity.

Speaker Change: We are competing in all of the big AI deals in our winning significant deployments at scale.

Speaker Change: Progress will not always be linear in the early stages, but we're winning in the market with strong feedback on our bee customers while occurring in customers every quarter.

Speaker Change: We have the right AI portfolio with more to come, the right services capabilities, and we are optimizing our sales coverage to capture this once in a generation opportunity.

Abon: With the coming IT hardware recovery cycle and our position in AI, I really like our hand, now over to Abon for the financials.

Bond: With the coming IT hardware recovery cycle and our position in AI, I really like our hand, now over to a bond for the financials.

Yvonne McGill: Thanks, Jeff. Let's start with an overview of our performance. Then I'll dive into specifics of ISG, CSG, DFS and guidance going forward. In the second quarter, we delivered strong operating results and solid cash flow, both of which position us well for the second-half of the year and beyond. I'm encouraged by the great momentum we're generating in ISG with AI leading the way. Our total revenue was up 9% to $25 billion, including the headwinds from the exit of our VMware resale business. And our combined CSG and ISG business grew 12%. Gross margin was $5.5 billion, or 21.8% of revenue. This is down 230 basis points due to an increase in our AI optimized server mix and a more competitive pricing environment. Operating expense was down 4% to $3.4 billion, or 13.7% of revenue. Let me emphasize, we expect solid top line growth in the second-half of the year even as we continue to optimize our cost structure to enhance our competitiveness over the long-term. A big part of this optimization effort is leveraging AI to reimagine our business processes and drive higher productivity. To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long-term.

Bond: Thanks, Jeff. Let's start with an overview of our performance. Then, I'll dive in the specifics of ISG, CSG, DSAS, and Guy M's going forward.

Abon: In the second quarter, we delivered strong operating results and solid cash flow, both of which positioned us well for the second half of the year and beyond. I'm encouraged by the great momentum we're generating in ISG with AI leading the way. Our total revenue was up 9% to $25 billion, including the headwind from the exit of our VMware result business, and our combined CSG and ISG business grew 12%. First margin was $5.5 billion or 21.8% of revenue. This is down 230 basis points due to an increase in our AI optimized server mix and a more competitive pricing environment. Operating expense was down 4% to $3.4 billion or 13.7% of revenue. Let me emphasize, we expect solid top line growth in the second half of the year, even as we continue to optimize our cost structure to enhance our competitiveness over the long term. A big part of this optimization effort is leveraging AI to reimagine our business processes and drive higher productivity. To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long term.

Jeffrey W. Clarke: In closing, we are leveraging our strengths to extend our leadership positions and lean into new opportunities like AI. We are offering customers choice, flexibility and control of how and where they build, train and run artificial intelligence. We are still in the early innings, and our AI opportunity with Tier-2 CSPs, enterprise and emerging sovereign customers is immense. Our view is supported by an AI hardware and services TAM of $174 billion, up from $152 billion, growing at a 22% CAGR over the next few years. We are competing in all of the big AI deals and are winning significant deployments at scale.

Bond: In the second quarter, we delivered strong operating missile and solid cash flow, both the Twitch position as well for the second half of the year and beyond.

Speaker Change: I'm encouraged by the Great Women and we're generating an IHG with AI leading the way.

Speaker Change: Our total revenue was up to 9% to 25 billion dollars, including the headwinds from the exit of our DM where we felt it. And our combined CSG and ISG business proved 12%.

Speaker Change: Groot's margin, which $5.5 billion or 21.8% of revenue.

Abon: This is down 230 basis points due to an increase in our AI optimized server mix and a more competitive pricing environment. Operating expense was down 4% to $3.4 billion or 13.7% of revenue. Let me emphasize, we expect solid top line growth in the second half of the year, even as we continue to optimize our cost structure to enhance our competitiveness over the long term. A big part of this optimization effort is leveraging AI to reimagine our business processes and drive higher productivity. To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long term.

Speaker Change: This is down 230 basis points due to an increase in our AI optimized server mix, and a more competitive pricing as well.

We are competing in all of the big AI deals in our winning significant deployments at scale.

Jeffrey W. Clarke: Progress will not always be linear in the early stages, but we are winning in the market with strong feedback from repeat customers while acquiring new customers every quarter. We have the right AI portfolio with more to come, the right services capabilities, and we are optimizing our sales coverage to capture this once-in-a-generation opportunity. With the coming IT hardware recovery cycle and our positioning in AI, I really like our hand. Now over to Yvonne for the financials.

Speaker Change: Operating extent was down 4% to 3.4 billion dollars or 13.7% of revenue.

Speaker Change: Let me emphasize, we expect solid top line growth in the second half of the year, even as it continues to optimize our cost structure to enhance our competitiveness of the long term.

Speaker Change: A big part of this optimization effort is leveraging AI to reimagine our business properties and drive higher productivity. But that end in Q2, we took a $328 million charge for workforce reduction as we continued to position our business for the long term.

Abon: To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long term. Now, let's look at operating income. We delivered a 3% increase to $2 billion or 8.1% of revenue. This was driven by higher revenue and lower operating expenses partially offset by a decline in our growth margin rate. Finally, Q2 net income was up 7% to $1.37 billion, primarily driven by stronger operating income, and our diluted EPS was up 9% to $1.89. So, that's a look at the whole.

Speaker Change: Now, let's look at operating income. We deliver a 3% increase to $2 billion or 8.1% of revenue.

Speaker Change: This was driven by higher revenue and lower operating expenses partially offset by a decline in our gross margin rate.

Speaker Change: Finally, Q2 net income was up 7% to $1.37 billion, primarily driven by stronger operating income. And our deluded EPS was up 9% to $1.89.

Yvonne McGill: Our total revenue was up 9% to $25 billion, including the headwinds from the exit of our VMware resale business. And our combined CSG and ISG business grew 12%. Gross margin was $5.5 billion, or 21.8% of revenue. This is down 230 basis points due to an increase in our AI optimized server mix and a more competitive pricing environment. Operating expense was down 4% to $3.4 billion, or 13.7% of revenue.

Abon: Now, let's talk about the specifics, starting with ISG where we delivered strong performance. ISG revenue was a record $11.6 billion, up 38%. Server and networking revenue was another record of $7.7 billion, up 80%. Server demand continues to outpace shittments with strong growth across traditional and AI servers, and the mix of our AI optimized server demand grew sequentially again. Storage revenue was down 5% at $4 billion. We were pleased to see double digit demand growth across our core storage portfolio, including PowerMax, PowerScale, PowerStore, and PowerProtectDataDemain. This strong storage performance was offset by headlings in the partner IP portion of our HCI court building. ISG operating income was up 22% to $1.3 billion due in large part to AI-optimized server revenue growth and associated gross margin dollars. Our ISG operating income rate was up 300 basis points sequentially to 11% of revenue. This rate improvement was the result of operating expense scaling driven by higher server revenue and storage profitability. We're pleased with the sequential improvement storage profitability.

Speaker Change: So that's a look at the whole. Now let's talk about the specifics, starting with ISG, where we delivered strong performance.

Speaker Change: ISG revenue was a record $11.6 billion up 38%.

Speaker Change: and Networking revenue was another record of $7.7 billion at 80%.

Speaker Change: ServerDemand continues to out-page shipment with strong growth across traditional and AI servers. And the mix of our AI optimized ServerDemand proves sequentially again. So we're traveling in with down 5% at $4 billion.

Yvonne McGill: Let me emphasize, we expect solid top line growth in the second-half of the year even as we continue to optimize our cost structure to enhance our competitiveness over the long-term. A big part of this optimization effort is leveraging AI to reimagine our business processes and drive higher productivity. To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long-term.

Speaker Change: We were pleased to see double digit demand grows across our core storage portfolio, including power max, power scale, power store, and power protect data domain.

To that end, in Q2, we took a $328 million charge for workforce reduction as we continue to position our business for the long term.

Abon: This strong storage performance was offset by headlings in the partner IP portion of our HCI court building. ISG operating income was up 22% to $1.3 billion due in large part to AI-optimized server revenue growth and associated gross margin dollars. Our ISG operating income rate was up 300 basis points sequentially to 11% of revenue. This rate improvement was the result of operating expense scaling driven by higher server revenue and storage profitability. We're pleased with the sequential improvement storage profitability. We gained scale with 6% sequential revenue growth. We were more disciplined in our pricing. We had a higher mix of Dell IP storage solutions and a better geographic mix with more North America activity.

Speaker Change: This strong storage performance was offset by headwind in the partner IT portion of our ACI court affiliate.

Yvonne McGill: Now, let's look at operating income. We delivered a 3% increase to $2 billion or 8.1% of revenue. This was driven by higher revenue and lower operating expenses, partially offset by a decline in our gross margin rate. Finally, Q2 net income was up 7% to $1.37 billion, primarily driven by stronger operating income. And our diluted EPS was up 9% to $1.89. So, that's a look at the whole. Now let's talk about the specifics, starting with ISG, where we delivered strong performance. ISG revenue was a record $11.6 billion, up 38%. Server and networking revenue was another record of $7.7 billion, up 80%. Server demand continues to outpace shipments with strong growth across traditional and AI servers and the mix of our AI optimized server demand grew sequentially again. Storage revenue was down 5% at $4 billion. We were pleased to see double-digit demand growth across our core storage portfolio, including PowerMax, PowerScale, PowerStore and PowerProtect Data Domain. This strong storage performance was offset by headwinds in the partner IP portion of our HCI portfolio. ISG operating income was up 22% to $1.3 billion, due in large part to AI-optimized server revenue growth and associated gross margin dollars. Our ISG operating income rate was up 300 basis points sequentially to 11% of revenue. This rate improvement was the result of operating expense scaling, driven by higher server revenue and storage profitability.

Speaker Change: ISG operating income was up 22% to $1.3 billion. Do in large part, to AI-optimize server revenue growth and associated gross margin dollars.

Speaker Change: Our ISG operating income rate was at 300 basis points, sequentially, to 11% of revenue.

Speaker Change: This rate improvement was the result of operating and scaling driven by higher server revenue and storage profitability.

Speaker Change: We're pleased with the sequential improvement George Frost ability. We gain scale with 6% to We're more disciplined in our pricing.

Yvonne McGill: Now let's talk about the specifics, starting with ISG, where we delivered strong performance. ISG revenue was a record $11.6 billion, up 38%. Server and networking revenue was another record of $7.7 billion, up 80%. Server demand continues to outpace shipments with strong growth across traditional and AI servers and the mix of our AI optimized server demand grew sequentially again. Storage revenue was down 5% at $4 billion. We were pleased to see double-digit demand growth across our core storage portfolio, including PowerMax, PowerScale, PowerStore and PowerProtect Data Domain. This strong storage performance was offset by headwinds in the partner IP portion of our HCI portfolio.

Speaker Change: We had a higher mix of Dell IP storage solutions and a better geographic mix with more North America activity.

Abon: As we mentioned last quarter, we expect our ISG operating margin rate to continue to improve in the second half of the year. In CSG, revenue was down 4% to $12.4 billion. Commercial revenue was flat at $10.6 billion while consumer revenue was down 22% to $1.9 billion. CSG operating income was $767 million for 6.2% of revenue due to a more competitive pricing environment. We expect growth in the second half of the year, particularly in the fourth quarter. The coming PC, Red Cross cycle, and the longer-term impact of AI will create tailwinds for the PC market.

Speaker Change: As we mentioned last quarter, we expect our ISG operating margin rate to continue to improve in the second half of the year.

Speaker Change: and CSG revenue was down 4% to $12.4 billion. Commercial revenue was flat at $10.6 billion while consumer revenue was down 22% to $1.9 billion.

This strong storage performance was offset by headlings in the partner IP portion of our HCI court building. ISG operating income was up 22% to $1.3 billion due in large part to AI-optimized server revenue growth and associated gross margin dollars. Our ISG operating income rate was up 300 basis points sequentially to 11% of revenue. This rate improvement was the result of operating expense scaling driven by higher server revenue and storage profitability. We're pleased with the sequential improvement storage profitability.

Speaker Change: DST operating income was $757,067 million or $6.2% of revenue due to a more competitive pricing environment.

Abon: We expect growth in the second half of the year, particularly in the fourth quarter. The coming PC, Red Cross cycle, and the longer-term impact of AI will create tailwinds for the PC market. Dell financial services' origination were up 5% to $2.4 billion in Q2. Strengthened as client and ISG financing offset the exit from our VM where we sell business and the sale of our consumer revolving portfolio in Q3 of last year. Normalizing for these two impacts, the SS origination for up more than 30%. Proof of increasing interest in our customer payment solution.

Speaker Change: We expect growth in the second half of the year, particularly in the fourth quarter.

Yvonne McGill: ISG operating income was up 22% to $1.3 billion, due in large part to AI-optimized server revenue growth and associated gross margin dollars. Our ISG operating income rate was up 300 basis points sequentially to 11% of revenue. This rate improvement was the result of operating expense scaling, driven by higher server revenue and storage profitability. We're pleased with the sequential improvement in storage profitability. We gained scale with 6% sequential revenue growth. We were more disciplined in our pricing. We had a higher mix of Dell IP storage solutions and a better geographic mix with more North America activity. As we mentioned last quarter, we expect our ISG operating margin rate to continue to improve in the second half of the year. In CSG, revenue was down 4% to $12.4 billion. Commercial revenue was flat at $10.6 billion, while consumer revenue was down 22% to $1.9 billion. CSG operating income was $767 million or 6.2% of revenue due to a more competitive pricing environment. We expect growth in the second-half of the year, particularly in the fourth quarter. The coming PC refresh cycle and the longer-term impact of AI will create tailwinds for the PC market.

Speaker Change: The coming PC read first cycle and the longer term impact of AI will create tailwind for the PC market.

Speaker Change: Delphanage of Services Reginations were up to 5% to 2.4 billion dollars in YouTube.

Speaker Change: Drink the bed quiet and ISG financing, offset the exit from our VMware Result Business and the sale of our consumer revolving portfolios in Q3 of last year, normalizing for these two impacts, the efforts of origination for up more than 30%.

We gained scale with 6% sequential revenue growth. We were more disciplined in our pricing. We had a higher mix of Dell IP storage solutions and a better geographic mix with more North America activity. As we mentioned last quarter, we expect our ISG operating margin rate to continue to improve in the second half of the year. In CSG, revenue was down 4% to $12.4 billion. Commercial revenue was flat at $10.6 billion while consumer revenue was down 22% to $1.9 billion. CSG operating income was $767 million for 6.2% of revenue due to a more competitive pricing environment. We expect growth in the second half of the year, particularly in the fourth quarter. The coming PC, Red Cross cycle, and the longer-term impact of AI will create tailwinds for the PC market.

Abon: Now, let's move to cash flow in the balance sheet. Q2 cash flow from operations was $1.3 billion. This was primarily driven by sequential revenue growth and profitability offset partially by working capital. Our cash conversion cycle was negative 43 days, up 4 days sequentially, driven primarily by the increase in our AI server business and AI order linearity. We ended the quarter with $6 billion in cash and investment down $1.3 billion annually. This is the result of capital return of $1 billion and net debt paydown of $1 billion during the quarter. We repurchased $5.5 million shares of stock at an average price of $130.3 and paid a $45 per share dividend. Since our capital return program began at the beginning of FY23, we returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability of the quarter, our core leverage ratio was $1.4 billion.

Speaker Change: Proof of increasing interest in our customer payment solution.

Speaker Change: Now, let's move to cash flow in the balance sheet. Q2 cash flow from operations was $1.3 billion. This was primarily driven by sequential revenue growth and profitability offset partially by working capital.

Yvonne McGill: As we mentioned last quarter, we expect our ISG operating margin rate to continue to improve in the second half of the year. In CSG, revenue was down 4% to $12.4 billion. Commercial revenue was flat at $10.6 billion, while consumer revenue was down 22% to $1.9 billion. CSG operating income was $767 million or 6.2% of revenue due to a more competitive pricing environment. We expect growth in the second-half of the year, particularly in the fourth quarter. The coming PC refresh cycle and the longer-term impact of AI will create tailwinds for the PC market.

Speaker Change: Our cast conversion cycle was negative 43 days of four days sequentially, driven primarily by the increase in our AI server business and AI order linearity.

Speaker Change: We ended the quarter with $6 billion in cash and investments down $1.3 billion to purchase.

Speaker Change: This is the result of capital return of $1 billion and net debt pay down at $1 billion during the quarter.

Abon: We repurchased $5.5 million shares of stock at an average price of $130.3 and paid a $45 per share dividend. Since our capital return program began at the beginning of FY23, we returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability of the quarter, our core leverage ratio was $1.4 billion.

We expect growth in the second half of the year, particularly in the fourth quarter. The coming PC, Red Cross cycle, and the longer-term impact of AI will create tailwinds for the PC market.

Speaker Change: We repurchased 5.5 million shares of stock at an average price of $130 in 3 cents and paid a 45 cent per share dividend.

Speaker Change: Since our capital return program began at the beginning of S. by 23, we returned $9 billion to share holders through stocked purchases and dividends.

Yvonne McGill: Dell Financial Services originations were up 5% to $2.4 billion in Q2. Strength in both client and ISG financing offset the exit from our VMware resale business and the sale of our consumer revolving portfolio in Q3 of last year. Normalizing for these two impacts, DFS originations were up more than 30%, proof of increasing interest in our customer payment solutions. Now let's move to cash flow and the balance sheet. Q2 cash flow from operations was $1.3 billion. This was primarily driven by sequential revenue growth and profitability, offset partially by working capital. Our cash conversion cycle was negative 43 days, up four days sequentially, driven primarily by the increase in our AI server business and AI order linearity. We ended the quarter with $6 billion in cash and investments, down $1.3 billion sequentially. This is the result of capital returns of $1 billion and net debt paydown of $1 billion during the quarter. We repurchased 5.5 million shares of stock at an average price of $130.03 and paid a $0.45 per share dividend. Since our capital return program began at the beginning of FY '23, we've returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability this quarter, our core leverage ratio was 1.4x.

Speaker Change: With our additional debt reduction and increased profitability to the quarter, our core leverage ratio was 1.4x.

Abon: Turning to guidance, indicators continued to point towards growth in the second half, of the Year. Against step backdrop, we expect Dell Technologies FY25 revenue to be in the range of $95.5 and $98.5 billion, with a midpoint of $97 billion for 10% growth. We expect ISG revenue to grow roughly 30%, driven primarily by AI and ongoing momentum in our traditional server business. We expect CSG revenue to be flat to live single digits for the year. We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year. We expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively. We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint.

Speaker Change: Turning to guys, indicators continue to point towards growth in the second half of the year.

Speaker Change: Against set backdrop, we expect Dell Technologies FY25 revenue to be in the range of 95.5 and 98.5 billion dollars. With a midpoint of 97 billion dollars for 10% growth.

Speaker Change: Big expect I should be ready to grow roughly 30% to the primarily by A.I. and one going momentum in our traditional server VISTA.

Yvonne McGill: Our cash conversion cycle was negative 43 days, up four days sequentially, driven primarily by the increase in our AI server business and AI order linearity. We ended the quarter with $6 billion in cash and investments, down $1.3 billion sequentially. This is the result of capital returns of $1 billion and net debt paydown of $1 billion during the quarter. We repurchased 5.5 million shares of stock at an average price of $130.03 and paid a $0.45 per share dividend.

Abon: We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year. We expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively.

Robin: Big success to get to you, Robin, to be flat, to love single digits for the year.

Speaker Change: We expect the combined ISG and CSG business to grow 14% at the midpoint.

Speaker Change: We expect our gross margin rate to decline roughly 180 basis points due to inflationary input costs, the competitive environment, and a higher mix of AI optimized servers.

Speaker Change: We will continue to drive efficiencies in the business and expect operating expense to be down for the year.

Speaker Change: We expect those ISG and CSG operating martin rates to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively.

Yvonne McGill: Since our capital return program began at the beginning of FY '23, we've returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability this quarter, our core leverage ratio was 1.4x. Turning to guidance. Indicators continue to point towards growth in the second-half of the year. Against that backdrop, we expect Dell Technologies FY '25 revenue to be in the range of $95.5 billion and $98.5 billion with a midpoint of $97 billion or 10% growth. We expect ISG revenue to grow roughly 30%, driven primarily by AI and ongoing momentum in our traditional server business. We expect CSG revenue to be flat to low single digits for the year. We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis-points due to inflationary input costs, the competitive environment and a higher mix of AI optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year. We expect both ISG and CSG operating margin rates to be within our long-term financial framework for the full year, 11% to 14% and 5% to 7%, respectively. We expect interest and others to be roughly $1.4 billion and an annual non-GAAP tax-rate of 18%. Diluted non-GAAP EPS is expected to be $7.80 plus or minus $0.25, and up 9% at the midpoint.

Yvonne McGill: Since our capital return program began at the beginning of FY '23, we've returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability this quarter, our core leverage ratio was 1.4x. Turning to guidance, indicators continued to point towards growth in the second half, of the Year. Against step backdrop, we expect Dell Technologies FY25 revenue to be in the range of $95.5 and $98.5 billion, with a midpoint of $97 billion for 10% growth. We expect ISG revenue to grow roughly 30%, driven primarily by AI and ongoing momentum in our traditional server business. We expect CSG revenue to be flat to live single digits for the year. We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year. We

Yvonne McGill: Since our capital return program began at the beginning of FY '23, we've returned $9 billion to shareholders through stock repurchases and dividends. With our additional debt reduction and increased profitability this quarter, our core leverage ratio was 1.4x. Turning to guidance, indicators continued to point towards growth in the second half, of the Year. Against step backdrop, we expect Dell Technologies FY25 revenue to be in the range of $95.5 and $98.5 billion, with a midpoint of $97 billion for 10% growth. We expect ISG revenue to grow roughly 30%, driven primarily by AI and ongoing momentum in our traditional server business. We expect CSG revenue to be flat to live single digits for the year. We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year.

Abon: We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint. For Q3 of fiscal 25, we expect revenue to be in the range of $24 and $25 billion at the midpoint of $24.5 billion, up 10%. We expect to combine ISG and CSG businesses to grow 14% at the midpoint with ISG up in the low 30s and CSG flat to low single digits.

Speaker Change: We expect interest and others to be roughly $1.4 billion in an annual non-gap tax rate of $1.4 billion.

Yvonne McGill: Turning to guidance, indicators continued to point towards growth in the second half, of the Year. Against step backdrop, we expect Dell Technologies FY25 revenue to be in the range of $95.5 and $98.5 billion, with a midpoint of $97 billion for 10% growth. We expect ISG revenue to grow roughly 30%, driven primarily by AI and ongoing momentum in our traditional server business. We expect CSG revenue to be flat to live single digits for the year. We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year.

Speaker Change: The latest non-gab EPS is expected to be $7.80, ultra-minus 25 cents, and up 9% at the midpoint.

Speaker Change: For Q3 of CISCO 25, we expect revenues to be in the range of 24 and $25 billion, but the midpoint of $24.5 billion, up to 10%.

Speaker Change: We expect to combine ISG and CSG businesses to grow 14% at the midpoint with ISG up in the low 30s and CSG flat to up low single digits.

Abon: We anticipate operating expenses to be down low single digits sequentially. Our operating income rate is expected to improve as we continue to drive profitability in ISG. Q3 deleted share count should be between $714 and $718 million shares. Deleted non-gap EPS is expected to be $2 plus or minus 10 cents. To close this out, I'll echo what Jeff said. We are very optimistic about FY25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business, and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize the benefits across our own business.

We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year. We expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively. We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint.

Yvonne McGill: We expect the combined ISG and CSG business to grow 13% at the midpoint. We expect our gross margin rate to decline roughly 180 basis points due to inflationary impact costs, the competitive environment, and a higher mix of AI-optimized servers. We will continue to drive efficiencies in the business and expect operating expense to be down low single digits for the year.

Speaker Change: We anticipate operating expenses to be down, those single digits to punch like.

Speaker Change: Are operating income rate is expected to improve as it continues to drive profitability in ISG.

Speaker Change: G3 delivered share count should be between 714 and 718 million shares. Deleted non-gap EPS is expected to be $2 plus or minus 10 cents.

Abon: To close this out, I'll echo what Jeff said. We are very optimistic about FY25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business, and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize the benefits across our own business. We're using it to improve customer and team member experiences and sales, software development, services, content management, and our supply chain. And in turn, we're using our experiences to help our customers realize benefits of AI for themselves.

We expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively. We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint.

Speaker Change: To close us out, I'll echo what Jeff said. We are very optimistic about FY 25 and beyond.

Yvonne McGill: We expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively. We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint. For Q3 of fiscal year '25, we expect revenue to be in the range of $24 billion and $25 billion at the midpoint of $24.5 billion, up 10%. We expect the combined ISG and CSG businesses to grow 14% at the midpoint with ISG up in the low-30s and CSG flat-to-up low-single digits. We anticipate operating expenses to be down low-single digits sequentially. Our operating income rate is expected to improve as we continue to drive profitability in ISG. Q3 diluted share count should be between 714 million and 718 million shares. Diluted non-GAAP EPS is expected to be $2 plus or minus $0.10. To close this out, I'll echo what Jeff said. We are very optimistic about FY '25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business and no one in the industry is better positioned than Dell. We are applying artificial intelligence and beginning to realize the benefits across our own business.

Yvonne McGill: expect both ISG and CSG operating margin rate to be within our long-term financial framework for the full year, 11 to 14% and 5 to 7% respectively. We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint. For Q3 of fiscal 25, we expect revenue to be in the range of $24 and $25 billion at the midpoint of $24.5 billion, up 10%. We expect to combine ISG and CSG businesses to grow 14% at the midpoint with ISG up in the low 30s and CSG flat to low single digits. We anticipate operating expenses to be down low single digits sequentially. Our operating income rate is expected to improve as we continue to drive profitability in ISG. Q3 deleted share count should be between $714 and $718 million shares. Deleted non-gap EPS is expected to be $2 plus or minus 10 cents. To close this out, I'll echo what Jeff said. We are very optimistic about FY25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business, and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize the benefits across our own business.

Speaker Change: A.I. and the coming I.T. Hardware Refers cycle will be tailwind for our business and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize a bit of fit to craft our own business.

We expect interest and other to be roughly $1.4 billion and an annual non-gap tax rate of 18%. Deleted non-gap EPS is expected to be $7.80 plus or minus 25 cents and up 9% at the midpoint.

Speaker Change: We're using it to improve customer and team member experiences and sales, software development, services, content management, and our supply chain. And in turn, we're using our experiences to help our customers realize benefits of AI for themselves.

Rob Williams: Before I turn it back to Rob for Q&N, I'd like to share that after 32 years of Del, Rob has decided to retire. For those who may not know, Rob began his career at Del in 1992 in corporate treasury while attending graduate schools. He held many roles since then, and has seen Del continue to transform and grow over the last three decades. This will be Rob's final earning cycle. We wanted to personally share the news with you all today. Paul Trunks will lead IR going forward. Paul is a long-time finance leader at Del, and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a new transition. Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You'll be greatly missed. I'll save my extended thank you, you can go by for later. For now, I'd like to turn it back over to Rob for few minutes.

For Q3 of fiscal 25, we expect revenue to be in the range of $24 and $25 billion at the midpoint of $24.5 billion, up 10%. We expect to combine ISG and CSG businesses to grow 14% at the midpoint with ISG up in the low 30s and CSG flat to low single digits. We anticipate operating expenses to be down low single digits sequentially. Our operating income rate is expected to improve as we continue to drive profitability in ISG. Q3 deleted share count should be between $714 and $718 million shares. Deleted non-gap EPS is expected to be $2 plus or minus 10 cents. To close this out, I'll echo what Jeff said. We are very optimistic about FY25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business, and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize the benefits across our own business.

Speaker Change: Before I turn it back to Rob Q&A, I'd like to share that after 32 years of doubt, Robert is decided to retire.

Robert: For those who may not know, Robert again has career at Dell in 1992 in corporate treasury, while attending graduate school.

Speaker Change: He tells many roles since then, has seen Dell continue to transform and grow over the last three decades.

Rob Williams: This will be Rob's final earning cycle. We wanted to personally share the news with you all today. Paul Trunks will lead IR going forward. Paul is a long-time finance leader at Del, and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a new transition. Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You'll be greatly missed. I'll save my extended thank you, you can go by for later. For now, I'd like to turn it back over to Rob for few minutes.

Yvonne McGill: We anticipate operating expenses to be down low-single digits sequentially. Our operating income rate is expected to improve as we continue to drive profitability in ISG. Q3 diluted share count should be between 714 million and 718 million shares. Diluted non-GAAP EPS is expected to be $2 plus or minus $0.10. To close this out, I'll echo what Jeff said. We are very optimistic about FY '25 and beyond.

Speaker Change: This will be Rob's final earnings cycle.

Rob Williams: Paul Trunks will lead IR going forward. Paul is a long-time finance leader at Del, and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a new transition. Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You'll be greatly missed. I'll save my extended thank you, you can go by for later. For now, I'd like to turn it back over to Rob for few minutes.

Speaker Change: We wanted to personally share the news with you all today.

Speaker Change: Paul Trumps will lead IAR going forward, Paul is a long time finance leader at Dow and a familiar name to many of you.

Speaker Change: Paul and Robert have been working closely over the last few years to ensure a new transition.

Jeff: Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You'll be greatly missed. I'll save my extended thank you, you can go by for later. For now, I'd like to turn it back over to Rob for few minutes.

Speaker Change: Robb, I'd like to thank you for all you've contributed to Delta's success over so many years, who will be greatly missed. I'll save my extended thank you for your advice for later. For now, I'd like to turn it back over to Rob for a few minutes.

To close this out, I'll echo what Jeff said. We are very optimistic about FY25 and beyond. AI and the coming IT hardware refresh cycle will be tailwinds for our business, and no one in the industry is better positioned than that. We are applying artificial intelligence and beginning to realize the benefits across our own business.

Rob Williams: For now, I'd like to turn it back over to Rob for few minutes.

Yvonne McGill: AI and the coming IT hardware refresh cycle will be tailwinds for our business and no one in the industry is better positioned than Dell. We are applying artificial intelligence and beginning to realize the benefits across our own business. We're using it to improve customer and team member experiences in sales, software development, services, content management and our supply chain. And in turn, we're using our experiences to help our customers realize benefits of AI for themselves. Before I turn it back to Rob for Q&A, I'd like to share that after 32 years at Dell, Rob has decided to retire. For those who may not know, Rob began his career at Dell in 1992 in Corporate Treasury while attending graduate school. He's held many roles since then and has seen Dell continue to transform and grow over the last three decades. This will be Rob's final earnings cycle. We wanted to personally share the news with you all today. Paul Frantz will lead IR going forward. Paul is a longtime finance leader at Dell and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a smooth transition. Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You will be greatly missed. I'll save my extended thank you and goodbyes for later. For now, I'd like to turn it back over to Rob for Q&A.

Rob Williams: Thank you, Yvonne, and thanks for those kind words and congrats to Paul. Let's get to Q&A. We ask that each participant ask one question to allow us to get to as many of you as possible. Let's go to the first question.

Operator: Let's get to Q&A. We have to each participant ask one question to allow us to get to as many of you as possible. Let's go to the first question.

Rob Williams: Thanks, Yvonne, and thanks for those kind of words and congrats to Paul. Let's get to Q&A. We have to each participant ask one question to allow us to get to as many of you as possible. Let's go to the first question.

Amit Daryanani: We'll take our first question from Amit Daryanani from Evercore. Love the retirement. You know, I guess my questions were found. I assume I just really stepped up from 8% and Q1, 11% in the quarter. Despite the 80% in terms of rodeo, I didn't answer first.

We're using it to improve customer and team member experiences and sales, software development, services, content management, and our supply chain. And in turn, we're using our experiences to help our customers realize benefits of AI for themselves. Before I turn it back to Rob for Q&N, I'd like to share that after 32 years of Del, Rob has decided to retire. For those who may not know, Rob began his career at Del in 1992 in corporate treasury while attending graduate schools. He held many roles since then, and has seen Del continue to transform and grow over the last three decades. This will be Rob's final earning cycle. We wanted to personally share the news with you all today. Paul Trunks will lead IR going forward. Paul is a long-time finance leader at Del, and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a new transition. Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You'll be greatly missed. I'll save my extended thank you, you can go by for later. For now, I'd like to turn it back over to Rob for few minutes.

Speaker Change: We'll take our first question from Amit Darinani from Evercore.

Yvonne McGill: Before I turn it back to Rob for Q&A, I'd like to share that after 32 years at Dell, Rob has decided to retire. For those who may not know, Rob began his career at Dell in 1992 in Corporate Treasury while attending graduate school. He's held many roles since then and has seen Dell continue to transform and grow over the last three decades. This will be Rob's final earnings cycle. We wanted to personally share the news with you all today. Paul Frantz will lead IR going forward. Paul is a longtime finance leader at Dell and a familiar name to many of you. Paul and Rob have been working closely over the last few years to ensure a smooth transition.

Speaker Change: Love the retirement.

Amit Darinani: You know, I guess my questions will be found. I assume I'll just be able to step up from a 8% and Q1 to 11% in the corner, despite the 80% to 20% rule the other names. So, you know, let's talk about what's enabling this kind of margin.

Jeff: Can you just talk about what's enabling this kind of margin expansion because maybe a lot of peers on the AI server side are struggling with, are struggling with the margins I feel right now. So I'd love to understand kind of what's enabling this margin expansion. And then critically as we think about this 11 to 14% target for the full year, what are the key inputs of building blocks to get them the back after the year. Thank you. Thanks. Thanks, Amit.

Speaker Change: and we have a lot of peers on the AI server side are struggling with trying to pass from with the margins that you're right now. So I love them this kind of what's enabling this margin expansion and then critically as we think about this 11 to 14% target for the full year, what are the key inputs of building blocks together in the back after the year. Thank you.

Jeff: I will get started on that one. So we were very pleased with the operating income rate. We saw in the second quarter, the 11% up 300 basis points, quarter of a quarter. That was really driven by improvement across the entire portfolio. The first revenue was up quarter, quarter, 26% which helped drive scale within the PNL. And as expected, the head ones we saw in Q1 did not persist into Q2. In storage, we had scale, we're price discipline. We mixed more towards our own Dell IP storage offerings, which was very helpful and saw strength in North America Enterprise. In the traditional server space, the demand environment continued to improve. Although, you know, we're still seeing some competitive pressures. And in AI servers, we had strong shipments with improved profitability and growing enterprise customers in that portfolio mix. You know, I'd say we do expect ISG operating income to finish FY25 within our long term framework that 11 to 14% and do expect as we as we move through the second half of the year that will continue to see that as we mix more towards our storage portfolio as we do. So each year?

Speaker Change: Thanks. Thanks, Amit. I will get started on that one. So we were very pleased with the operating income rate we saw in the second quarter, the 11%.

Yvonne McGill: Rob, I'd like to thank you for all you've contributed to Dell's success over so many years. You will be greatly missed. I'll save my extended thank you and goodbyes for later. For now, I'd like to turn it back over to Rob for Q&A.

Speaker Change: Up 300 basis points, quarter or quarter. That was really driven by improvement across the entire portfolio.

Speaker Change: I mean, first revenue was up quarter record or 26% which helped drive scale within the P&L.

Speaker Change: and as expected, the head ones we saw in Q1 did not persist in the Q2.

Speaker Change: and Storage, we had scale, we're price discipline, we mixed more towards our own Dell IT storage offerings which was very helpful and some strengths in North America enterprise.

Operator: We'll take our first question from Amit Daryanani from Evercore.

Jeff: We mixed more towards our own Dell IP storage offerings, which was very helpful and saw strength in North America Enterprise. In the traditional server space, the demand environment continued to improve. Although, you know, we're still seeing some competitive pressures. And in AI servers, we had strong shipments with improved profitability and growing enterprise customers in that portfolio mix. You know, I'd say we do expect ISG operating income to finish FY25 within our long term framework that 11 to 14% and do expect as we as we move through the second half of the year that will continue to see that as we mix more towards our storage portfolio as we do. So each year?

Amit Daryanani: Best of luck with the retirement. I guess my question is really around ISG margins. This could really step up from 8% in Q1 to 11% in this quarter, despite the 82% sequential growth you had in AI servers. So can you just talk about what's enabling this kind of margin expansion because really a lot of your peers on the AI server side are struggling with--are struggling with their margins, I feel right now. So I'd love to understand kind of what's enabling this margin expansion. And then critically, as we think about this 11% to 14% target for the full-year, what are the key inputs of building blocks together in the back-half of the year? Thank you.

Speaker Change: In the traditional server space, the demand environment continued to improve. Although, you know, we're still seeing some competitive pressures. And in AI servers.

Can you just talk about what's enabling this kind of margin expansion because maybe a lot of peers on the AI server side are struggling with, are struggling with the margins I feel right now. So I'd love to understand kind of what's enabling this margin expansion. And then critically as we think about this 11 to 14% target for the full year, what are the key inputs of building blocks to get them the back after the year. Thank you.

Speaker Change: We had strong shipments with improved profitability and growing enterprise customers in that portfolio mix.

Speaker Change: Yvonne McGill, you know, I say...

Yvonne McGill: We do expect.

Yvonne McGill: Hi, it's G operating income to finish FY25 within our long-term framework that 11 to 14% and do expect as we move through the second half of the year that we'll continue to see that as we mix more towards our storage portfolio as we do.

Yvonne McGill: Thanks, Amit. And I will get started on that one. So we were very pleased with the operating income rate we saw in the second quarter, though 11%, up 300 basis points quarter-over-quarter. That was really driven by improvement across the entire portfolio. I mean, first, revenue was up quarter-over-quarter 26%, which helped drive scale within the P&L. And as expected, the headwinds we saw in Q1 did not persist into Q2. In storage, we had scale. We're price disciplined. We mixed more towards our own Dell IP storage offerings, which was very helpful and saw strength in North America enterprise. In the traditional server space, the demand environment continued to improve, although we're still seeing some competitive pressures. And in AI servers, we had strong shipments with improved profitability and growing enterprise customers in that portfolio mix. I'd say, we do expect ISG operating income to finish FY '25 within our long-term framework that 11% to 14% and do expect as we move through the second-half of the year that we'll continue to see that as we mix more towards our storage portfolio as we do each year.

Jeffrey W. Clarke: Yes, Amit, maybe two additional data points that I think are worth noting in the improvement. One as Yvonne said, our Dell IP core storage. On a demand basis, it was up double-digits. We improved the margins in each of our categories, PowerMax, PowerStore, our PowerScale and PowerProtect, data protection quarter-over-quarter through the price discipline that Yvonne mentioned. And the second one, which I think is very important, we improved margins of our AI portfolio. And we did that with the same sort of price discipline, but more importantly, the engineering value-add and the technical value-add that we're bringing to our customers and the expansion from beyond the specific node to the rack level deployment. So our ability to add L11, L12 capabilities, expert deployment, system validation and testing, the ability to help engineer the solution at our customer site, the extension into networking, the ability to cable these things up and deploy them at scale, that is allowing us to extract additional value in our AI deployments.

Yvonne McGill: E-chair.

Speaker Change: Yeah, I'm at maybe two additional data points that I think are worth noting the improvement. One is, of course, a bond said, our gel-IP course forage.

Speaker Change: On a demand basis, it was up double digits. We improved the margins and each of our categories, PowerMax, PowerStore.

Abon: Our power scale and power protect data protection quarter over quarter through the price discipline that Abon mentioned. And the second one, which I think is very important, we improve margins of our AI portfolio.

Abon: and we did that with the same sort of price discipline, but more importantly, the engineering value add and the technical value add that we're bringing to our customers.

Jeff: So our ability to add 11, 12 capabilities, expert deployment, system validation and testing, the ability to help engineer the solution at our customer site, the extension into networking, the ability to cable these things up and deployment scale, that is allowing us to extract additional value in our AI deployments.

Abon: and the expansion from beyond the specific node to the rack level deployment. So our ability to add 11 and 12 capabilities.

Abon: Experts Deployment, System Validation and Testing, the ability to help engineer the solution at our customer site, the extension into networking, the ability to cable these things up and deployment scale, that is allowing us to extract additional value in our AI deployments.

Rob Williams: All right. Hi, thanks for the question, Amit. Let's go to the next question.

Operator: Let's go to the next question.

Speaker Change: Hey, thanks for the question on it. Let's go to the next question.

Ben Reitz: And our next question comes from Ben Reitz with Meelius Research. Hi, can you hear me okay? Yes, yes. Okay, great. Hey, how you doing? Congrats, Rob. I can say I knew you will back when, but I won't. Congrats. And so listen, I'm just trying to reconcile your guidance, Yvonne, and then I follow up. It looks like it's more 4Q loaded than what the street was thinking, and there was the talk of the layoffs into the print here.

Speaker Change: And our next question comes from Ben, right? It's with meliest research.

Speaker Change: I'll be back with you, I'll be back with you,

Ben: Hi, can you hear me okay?

Speaker Change: Yes, yes.

Ben: I've been OK great.

Ben: Hey, how you doing? And congrats, Rob. I can say I knew you were back when, but I won't, congrats, and so listen, I'm just trying to reconcile, you know, your guidance, Ivan, and then I follow up. It looks like, um,

Speaker Change: It's more for Q-loaded than what the street was thinking and you know, there was the talk of the layoffs, you know, into the print here And I was just wondering if you can reconcile that for us, you know, the $2 and then it looks like, you know, maybe the street has to raise the 4Q

Ben Reitz: And I was just wondering if you can reconcile that for us. The $2, and then it looks like maybe the street has to raise the 4Q, these would be where they were. And I was wondering if that has to do with timing of savings. And I was wondering also if you can quantify the savings. What the 328 kind of equates to in savings and how we should think about that. And then Jeff, if you don't mind, if you could just mention how the AI server margins are progressing. And what we should think about with the flat backlog Q to Q. I know you had great sales, but you know, should the flat backlog be a concern. I know there was a lot in there, but since I congratulated Rob, maybe you'll give me a pass and answer them all.

Speaker Change: BZV, where they were and I was wondering if that has to do with timing of savings.

Speaker Change: and I was wondering also if you can quantify the savings, what the 328 kind of equates to in the savings and how we should think about that and then Jeffrey, if you don't mind.

Jeffrey: Um, if you could just mention how the AI server margins are progressing.

Ben Reitz: And what we should think about with the flat backlog Q to Q. I know you had great sales, but you know, should the flat backlog be a concern. I know there was a lot in there, but since I congratulated Rob, maybe you'll give me a pass and answer them all. That was the greatest one question that 10 to 5 that I've seen. That was the classic bend. We may have Rob. We'll see if we can get through that at least the first part of those questions, then we'll let Yvonne start. All right.

Speaker Change: and what we should think about with the flat backlog Q2Q. I know you had great sales, but...

Rob Williams: You know, should the flat backlog be a concern? I know there was a lot in there, but since I congratulate Rob, maybe he'll give me a pass and answer them all. Thank you. I was a greatest one question that I've seen. That was the classic, Ben. We may have, we have Robbing.

Operator: And our next question comes from Ben Reitzes with Melius Research.

Hi, can you hear me okay? Yes, yes. Okay, great. Hey, how you doing? Congrats, Rob. I can say I knew you will back when, but I won't. Congrats. And so listen, I'm just trying to reconcile your guidance, Yvonne, and then I follow up. It looks like it's more 4Q loaded than what the street was thinking, and there was the talk of the layoffs into the print here.

Ben Reitzes: Hi, can you hear me okay?

Yes, yes. Okay, great. Hey, how you doing? Congrats, Rob. I can say I knew you will back when, but I won't. Congrats. And so listen, I'm just trying to reconcile your guidance, Yvonne, and then I follow up. It looks like it's more 4Q loaded than what the street was thinking, and there was the talk of the layoffs into the print here.

Multiple: Yes.

Ben Reitzes: Okay, great. Hi, how you doing? And congrats, Rob. I can say I knew you back when, but I won't. Congrats and so listen, I'm just trying to reconcile your guidance, Yvonne. And then I have a follow-up. It looks like there--it's more 4Q loaded than what the Street was thinking and there was the talk of the layoffs into the print here. And I was just wondering if you can reconcile that for us, the $2 and then it looks like maybe the Street has to raise the 4Q vis-a-vis where they were. And I was wondering if that has to do with timing of savings, and I was wondering also if you can quantify the savings, what the 328 kind of equates to in savings and how we should think about that? And then, Jeff, if you don't mind if you could just mention how the AI server margins are progressing and what we should think about with the flat backlog Q-to-Q? I know you had great sales, but should the flat backlog be a concern? I know there was a lot in there, but since I congratulated Rob, maybe you'll give me a pass and answer them all. Thanks.

Rob Williams: Well, see, we can get through the least of our part of those questions, Ben, we'll end up on start. All right, and so for, you know, I can...

Abon: So for, you know, I could talk to the second half, but let me start with Q3. You know, we're talking about CSG and ISG combined are going to grow at 14%. Total revenue at the midpoint of 24 and a half billion. So up 10% year over year. So 14 for CSG, ISG, 10 and total. ISG up 30% year over year. So very, very impressive continued performance there. Durban primarily by AI servers as well as continued momentum and traditional servers. So we're expecting to see that. CSG, we're expecting to be flat to up, you know, low single digits in the third quarter. Expecting gross margin rates to be up slightly quarter over quarter. And, you know, I'd say remember that we're expecting inflationary environment in the third quarter in the second half actually holistically as well as a continued competitive environment. Optics, which I think you have a somewhat of question on. We've already, you know, guided to that optics holistically and that will be down. We did that last quarter. So we're expecting that to be down about 2% quarter over quarter. And then from an opting standpoint, you know, expecting continued improvement there driven by ISG and storage and traditional server mix as well as, you know, performing within our long term framework holistically.

Speaker Change: Talk to the second half, but let me start with Q3. We're talking about CSG and ISG.

Speaker Change: and Combined are going to grow at 14%, right? Total revenue at the midpoint of 24 and a half billion, so up 10% year over year, so 14% for CSG ISG 10 and total.

Speaker Change: IHG up 30% in your over year, so very, very impressive, continued performance there during primarily by AI servers, as well as continued momentum and traditional servers, so we're expecting to see that. CSG, we're expecting to be flat.

Abon: So we're expecting to see that. CSG, we're expecting to be flat to up, you know, low single digits in the third quarter. Expecting gross margin rates to be up slightly quarter over quarter. And, you know, I'd say remember that we're expecting inflationary environment in the third quarter in the second half actually holistically as well as a continued competitive environment. Optics, which I think you have a somewhat of question on. We've already, you know, guided to that optics holistically and that will be down. We did that last quarter. So we're expecting that to be down about 2% quarter over quarter. And then from an opting standpoint, you know, expecting continued improvement there driven by ISG and storage and traditional server mix as well as, you know, performing within our long term framework holistically.

Speaker Change: to up, you know, low single digits in the third quarter. Executive gross margin rates to be up slightly, quarter of a quarter. And, you know, I'd say remember that we're expecting...

And what we should think about with the flat backlog Q to Q. I know you had great sales, but you know, should the flat backlog be a concern. I know there was a lot in there, but since I congratulated Rob, maybe you'll give me a pass and answer them all.

Speaker Change: Inflationary environment in the third quarter in the second half actually holistically, as well as a continued competitive environment.

Speaker Change: I think you have a somewhat of question on. We've already guided to that office holistically and that will be down. We did that last quarter, so we're sick. That's been down about 2% quarter of a quarter.

Abon: We did that last quarter. So we're expecting that to be down about 2% quarter over quarter. And then from an opting standpoint, you know, expecting continued improvement there driven by ISG and storage and traditional server mix as well as, you know, performing within our long term framework holistically. I don't know if there's anything that on the third quarter as we go into the to the full year. So I think your question on are we waiting more towards the fourth quarter than the third quarter.

That was the greatest one question that 10 to 5 that I've seen. That was the classic bend. We may have Rob. We'll see if we can get through that at least the first part of those questions, then we'll let Yvonne start. All right.

Jeffrey W. Clarke: That was the greatest one question at a time of five that I've seen.

That was the classic bend. We may have Rob. We'll see if we can get through that at least the first part of those questions, then we'll let Yvonne start. All right.

Rob Williams: That was a classic, Ben.

We may have Rob. We'll see if we can get through that at least the first part of those questions, then we'll let Yvonne start. All right.

Yvonne McGill: We may have Rob answer--

We'll see if we can get through that at least the first part of those questions, then we'll let Yvonne start. All right.

Rob Williams: We'll see if we can get through at least the first part of those questions, Ben, I will let Yvonne start.

Speaker Change: and then from an offing standpoint, you know, expecting continued improvement there driven by ISG and storage and traditional server mix as well as, you know, performing within our long-term framework holistically.

Yvonne McGill: All right. So for--I could talk to the second-half, but let me start with Q3. We were talking about CSG and ISG, combined are going to grow at 14%, right? Total revenue at the midpoint of $24.5 billion, so up 10% year-over-year. So 14% for CSG, ISG, 10% in total. ISG up 30% year-over-year. So very, very impressive continued performance there, driven primarily by AI servers as well as continued momentum in traditional servers. So we're expecting to see that. CSG, we're expecting to be flat to up low-single digits in the third quarter. I'm expecting gross margin rates to be up slightly quarter-over-quarter. And I'd say, remember that we're expecting inflationary environment in the third-quarter, in the second-half actually holistically as well as a continued competitive environment. OpEx, which I think you have a--somewhat a question on, we've already guided to that OpEx holistically and that will be down, we did that last quarter. So we expect that to be down about 2% quarter-over-quarter. And then from an OpEx standpoint, expecting continued improvement there driven by ISG and storage and traditional server mix as well as performing within our long-term framework holistically.

Speaker Change: I don't know if there's anything that on the third quarters we go into the full year.

Speaker Change: So, I think your question on, are we waiting more towards the fourth quarter than the third quarter? And we're sequentially higher in the fourth quarter from a historical perspective and expect to continue that tradition.

Abon: We're sequentially higher in the fourth quarter from a historical perspective and expect to continue that tradition. We are expecting a CSG recovery to begin in the second half more weighted towards the fourth quarter. And then you'd also have your natural largest quarter from a storage perspective in that fourth quarter.

Speaker Change: We are expecting a CSG recovery to begin in the second half, more weighted towards the fourth quarter and then you'd also have your natural largest quarter from a storage perspective in that fourth quarter.

Jeff: And so you'll see that that that would be reflected both the momentum and CSG as well as the storage momentum in the profitability and performance in that in that period, and then on the two AI questions, the AI server margins. I'll start there summarizing what we discussed with Amit is margins were up sequentially. We were able to extract value out of our offer. We were able to extract the value out of our AI offer by expanding our, again, our value proposition to our customers beyond the box to the rack level.

Speaker Change: and so you'll see that that would be reflected, both from a metaman CSG as well as the storage momentum in the profitability and performance in that period.

Speaker Change: and then on the two AI questions, the AI server margins, I'll start with there summarizing what we discussed with Ahmed is.

Speaker Change: Margins were up sequentially. We were able to extract value out of our offer. We were able to extract the value out of our AI offer.

We did that last quarter. So we're expecting that to be down about 2% quarter over quarter. And then from an opting standpoint, you know, expecting continued improvement there driven by ISG and storage and traditional server mix as well as, you know, performing within our long term framework holistically.

Speaker Change: Like spending our, again, our value proposition to our customers beyond the box to their rack levels or ability to sell services around the box, the ability to sell networking and networking integration.

Jeff: So our ability to sell services around the box, the ability to sell networking, network integration, the ability to sell what we call L11 and L12 capabilities, which think of it as factory integration, solution testing and on-site deployment, the ability to configure the at scale for our largest customers is allowing us to extract differentiated value of our competition. We're going to continue to focus on that and continue to find more ways to help our customers deploy AI at scale. In terms of the backlog, the first thing I would point to is shipments nearly doubled quarter over quarter. I think that's an important thing to think through. For us, for the last 12 months, we shipped $6.5 billion of AI infrastructure to our customers on a demand line of just under $9.5 billion. What you're seeing is improved supply.

Yvonne McGill: I don't know if there's anything to add-on the third-quarter as we going to the full-year. So I think your question on, are we waiting more towards the fourth-quarter than the third-quarter? We're sequentially higher in the fourth-quarter from a historical perspective and expect to continue that tradition. And we are expecting a CSG recovery to begin in the second-half, more weighted towards the fourth-quarter. And then you'd also have your natural largest quarter from a storage perspective in that fourth-quarter. And so, you'll see that would be reflected both the momentum in CSG as well as the storage momentum in the profitability and performance in that period.

Speaker Change: The ability to sell what we call L11 and L12 capabilities, which think of it as factory and inauguration, solution testing and onsite deployment, the ability to configure the ed scale for our largest customers is allowing us to extract different shaded value.

Speaker Change: Up!

Speaker Change: of our competition. We're going to continue to focus on that and continue to find more ways to help our customers deploy AI at scale.

Jeff: In terms of the backlog, the first thing I would point to is shipments nearly doubled quarter over quarter. I think that's an important thing to think through. For us, for the last 12 months, we shipped $6.5 billion of AI infrastructure to our customers on a demand line of just under $9.5 billion. What you're seeing is improved supply. Still working with customers on the delivery dates, still working with customers on their ability to accept the equipment and integrate it into their data centers.

Speaker Change: In terms of the backlog, I mean the first thing I would point to is shipment's nearly doubled quarter over quarter.

Speaker Change: and I think that's an important thing to think through, love.

And so you'll see that that that would be reflected both the momentum and CSG as well as the storage momentum in the profitability and performance in that in that period,

Speaker Change: For us, for the over the last 12 months, we shipped six and a half billion dollars of AI infrastructure to one customers.

Jeffrey W. Clarke: And then on the two AI questions, the AI server margins, I'll start there summarizing what we discussed with Amit is, margins were up sequentially. We were able to extract value out of our offer. We were able to extract the value out of our AI offer by expanding our--again, our value proposition to our customers beyond the box to the rack level. So our ability to sell services around the box, the ability to sell networking and network integration, the ability to sell what we call L11 and L12 capabilities, which think of it as factory integration, solution testing and on-site deployment. The ability to configure these at-scale for our largest customers is allowing us to extract differentiated value of our competition. We're going to continue to focus on that and continue to find more ways to help our customers deploy AI at-scale. In terms of the backlog, I mean, the first thing I would point to is shipments nearly doubled quarter-over-quarter. And I think that's an important thing to think through. For us over the last 12 months, we shipped $6.5 billion of AI infrastructure to our customers on the demand line of just under $9.5 billion. What you're seeing is improved supply.

Speaker Change: Under demand line of just under $9.5 billion.

Speaker Change: What you're seeing is improved supply, still working with customers on their delivery dates, still working with customers on their ability to accept the equipment and integrate it into their data centers.

Jeff: I'm not worried about the backlog as well. I think we've made reference before of our five quarter pipeline. Our five quarter pipeline remains healthy. I think I made reference that it's several multiples of our backlog. We have visibility to a pretty significant pipeline and it's our job to convert that over the coming quarters.

Speaker Change: Uh, I'm not worried about the backlog as well. I think we've made reference before of our five-quarter pipeline and our five-quarter pipeline remains healthy. I think I made reference that it's several multiples of our backlog.

Speaker Change: We have visibility to a pretty significant pipeline, and it's our job to convert that over the coming quarters.

Speaker: All right. Thanks, Ben. Clearly exciting, exciting opportunity for us. All right.

Speaker Change: Thanks Ben, clearly exciting, exciting opportunity for us. All right, next question.

Operator: Next question.

Eric Woodring: We'll move to our next question from Eric Woodring with Morgan Stanley. Great, guys. Thanks so much for taking my question and Rob just take what everyone is saying.

Speaker Change: We'll move to our next question from Eric Woodring with Morgan Stanley.

Eric Woodring: Great guys, thanks so much for taking my question and Rob, I'll just take a look at what everyone is saying. You'll be missed, thanks for all your help over the years. Jeff, I appreciate all the detail that you've provided in your prepared remarks on the make-up of your AI Optimize Server Customer of Base. Increasing number of enterprises, expanding pipeline and inter-DUCSDs and enterprise.

Jeff: You'll be missed. Thanks for thanks for all your help over the years. Jeff, I appreciate all the detail that you've provided in your prepared remarks on the makeup of your AI optimized server customer of base. Increasing number of enterprise is expanding pipeline and tier two CSPs in enterprise. Is there any way you can just maybe expand on those comments abated? What I'm really trying to get a better understanding on is just that the concentration of spending within your backlog within your pipeline for AI optimized servers and how that's changing for you. Thanks so much.

In terms of the backlog, the first thing I would point to is shipments nearly doubled quarter over quarter. I think that's an important thing to think through. For us, for the last 12 months, we shipped $6.5 billion of AI infrastructure to our customers on a demand line of just under $9.5 billion. What you're seeing is improved supply.

Speaker Change: Is there any way you can just maybe expand on those comments about it and what I'm really trying to get a better understanding on is just that the concentration of spending within your backlog within your pipeline for AI Optimize Server and how that's changing for you. Thanks so much.

Jeffrey W. Clarke: What you're seeing is improved supply. Still working with customers on their delivery dates, still working with customers on their ability to accept the equipment and integrate it into their data centers. I'm not worried about the backlog as well. I think we've made reference before of our five-quarter pipeline. Our five-quarter pipeline remains healthy. I think I made reference that it's several multiples of our backlog. We have visibility to a pretty significant pipeline, and it's our job to convert that over the coming quarters.

Jeffrey W. Clarke: Sure. Let's see where do I start with that. Obviously, the pipeline I talked about is growing, growing at the size of multiples of our backlog. The composition of that is continuing to see the number of enterprise customers grow and the amount of revenue in that pipeline is growing, which to me is encouraging and signals customers--enterprise customers specifically are moving from experimenting to now piloting the technology to do a vast number of things, some of the use cases that Yvonne mentioned earlier. So we're encouraged by the number of enterprise customers growing quarter-over-quarter. We're encouraged by the number of enterprise customers in our pipeline and the revenue that represents. Clearly, some of these large Tier-2 CSP deployments, training foundational models are still a large percentage of the backlog, large percentage of the pipeline. And I think that's just the scale, but we are seeing the continued growth of enterprise, which again, I think is very, very encouraging, whether that be in life sciences, higher education, financial services, some of the national labs, et cetera, we're seeing expansion across the enterprise.

Still working with customers on the delivery dates, still working with customers on their ability to accept the equipment and integrate it into their data centers. I'm not worried about the backlog as well. I think we've made reference before of our five quarter pipeline. Our five quarter pipeline remains healthy. I think I made reference that it's several multiples of our backlog. We have visibility to a pretty significant pipeline and it's our job to convert that over the coming quarters.

Speaker Change: [inaudible]

Speaker Change: Sure, let's see where to always start with that. Obviously, the...

Speaker Change: Hipline, I talked about is growing up the size of multiples of our backlog, the composition of that is continuing to see the number of enterprise customers grow in the amounts of revenue in that pipeline is growing.

Abon: which, to me, is encouraging and signals customers, enterprise customers specifically are moving from experimenting to now piloting the technology to do a vast number of things some of the use cases that Abon mentioned earlier.

Ben Reitzes: All right. Thanks.

Rob Williams: Thanks, Ben. Clearly exciting. Exciting opportunity for us. All right. Next question.

Operator: We'll move to our next question from Erik Woodring with Morgan Stanley.

Jeff: We're encouraged by the number of enterprise customers growing quarter over quarter. We're encouraged by the number of enterprise customers on our pipeline and the revenue that represents. Clearly, some of these large tier two CSP deployments training foundational models are still a large percentage of the backlog, large percentage of the pipeline. And I think that's just the scale but we are seeing the continued growth of enterprise which again I think is very very encouraging whether that be in life sciences, higher education, financial services, some of the national labs, etc. We're seeing expansion across the enterprise.

Erik Woodring: Great, guys. Thanks so much for taking my question. And Rob, just echo what everyone was saying, you'll be missed. Thanks for all your help over the years. Jeff, I appreciate all the detail that you provided in your prepared remarks on the makeup of your AI optimized server customer base, increasing number of enterprises, expanding pipeline in Tier-2 CSPs and enterprise. Is there any way you can just maybe expand on those comments a bit? And what I'm really trying to get a better understanding on is just that the concentration of spending within your backlog, within your pipeline for AI optimized servers and how that's changing for you? Thanks so much.

Abon: So we're encouraged by the number of enterprise customers growing quarter of a quarter. We're encouraged by the number of enterprise customers on our pipeline and the revenue that represents.

Abon: Clearly, some of these large, tier 2 CSP deployments, training foundational models are still a large percentage of the backlog, large percentage of the pipeline.

Abon: And I think that's just the scale that we are seeing the continued growth of enterprise, which, again, I think is very, very encouraging, whether that be in life sciences, higher education, financial services, some of the national labs, etc., we're seeing expansion across the enterprise.

Jeff: We're seeing expansion across the enterprise. When I look at the composition of the backlog and technology that ranges from parts that are available today to parts that are available in the future and everything in between our backlog represents things that we can ship into three things that we can ship in Q4 into next year. And obviously a five quarter pipeline represents the same thing which extends into next year. Was that enough color? Was that helpful? Yes, that's perfect. I appreciate that. Thank you. Thanks for the detail. You're welcome.

Abon: When I look at the composition of the backlog in technology, it ranges from parts that are available today.

Abon: To parts that are available in the future and everything in between are backlog represents things that we can ship into three things that we can ship into four and to next year and obviously a five quarter pipeline represents the same thing which extends into next year.

Abon: Eric, was that enough color or did it do it helpful?

Eric Woodring: Good job, that's perfect. I appreciate that. Thank you. Thanks for the detail.

Tony Sekonacci: And we'll move to our next question from Tony Sekonacci Bernstein. Yes, thank you. And Rob, congratulations on your retirement. We will miss you. I just wanted to I have one confirmation then a question. In terms of improving profitability in AI servers from Q1 to Q2, did growth profits on AI server growth profit percentage on AI servers improve materially between Q1 and Q2? Or just operating profit dollars because there was clearly significant topics improvement? The short answer to that is both improved.

Eric Woodring: You're welcome.

Speaker Change: and we'll move to our next question from Tony 2nd O'Chee, Bernstein.

Speaker Change: Yes, thank you and Rob, congratulations on your retirement. We will miss you.

Speaker Change: I just wanted to have one confirmation then a question.

Speaker Change: in terms of improving profitability in AI servers from Q1 to Q2.

Speaker Change: did gross profits on AI server gross profit percentage on AI servers improved materially between Q1 and Q2, we're just operating profit dollars because there was clearly significant in pop-action improvements.

Speaker Change: The short answer to that is both improved.

Toni Sacconaghi: Okay. And then, I was hoping maybe you could just provide a little more color on the storage dynamics because you talked about Dell IP businesses growing double-digits and yet the storage business was down 5% year-over-year. So maybe you can help dimension what else is in that equation that suggests that hyperconverged is either an enormous part of your business or was down by a huge amount, or there's some other piece that we need to be able to make those numbers pull together. So perhaps you can provide a little more color on that. Thank you.

We're seeing expansion across the enterprise.

When I look at the composition of the backlog and technology that ranges from parts that are available today to parts that are available in the future and everything in between our backlog represents things that we can ship into three things that we can ship in Q4 into next year. And obviously a five quarter pipeline represents the same thing which extends into next year. Was that enough color? Was that helpful? Yes, that's perfect. I appreciate that. Thank you. Thanks for the detail. You're welcome.

Jeffrey W. Clarke: When I look at the composition of the backlog and technology, it ranges from parts that are available today to parts that are available in the future and everything in between, our backlog represents things that we can ship in Q3, things that we can ship in Q4, into next year. And obviously, a five-quarter pipeline represents the same thing, which extends into next year. Erik, was that enough color? Was that helpful?

Speaker Change: Okay.

Speaker Change: and then I was hoping maybe you could just provide a little more color on the storage dynamics because you talked about Dell IP businesses.

Speaker Change: growing double ditches.

Speaker Change: and yet the storage business was down 5% year over year.

Speaker Change: So maybe you can help to mention what else is in that equation that suggests that hyper converges either an enormous part of your business or was down by a huge amount or there's some other piece that we need to be able to make those numbers pulled together. So perhaps you can provide a little more color on that. Thank you.

Abon: So perhaps you can provide a little more color on that. Thank you. Sure, Levon and I will try to tag team this but I'll start with as I mentioned previously, if you look at our Dell IP portfolio and the success we had in Q2. It was it was good to see we had double digit growth as we referenced on a demand basis across the high end products, the mid range products, the instruction products and the data protection products.

Yes, that's perfect. I appreciate that. Thank you. Thanks for the detail. You're welcome.

Erik Woodring: Yes, that's perfect. I appreciate that. Thank you. Thanks for the detail.

Jeffrey W. Clarke: You're welcome.

Operator: And we'll move to our next question from Toni Sacconaghi, Bernstein.

Speaker Change: Sure, I live on an aisle, try to tag team this, but I'll start with, as I mentioned previously, if you look at our Dell IP portfolio.

Toni Sacconaghi: Yes, thank you. And Rob, congratulations on your retirement. We will miss you. I just wanted to I have one confirmation then a question. In terms of improving profitability in AI servers from Q1 to Q2, did growth profits on AI server growth profit percentage on AI servers improve materially between Q1 and Q2? Or just operating profit dollars because there was clearly significant topics improvement? The short answer to that is both improved.

Toni Sacconaghi: Yes, thank you. And Rob, congratulations on your retirement. We will miss you. I just wanted to--I have one confirmation and a question. In terms of improving profitability in AI servers from Q1 to Q2, did gross profits on AI server gross profit percentage on AI servers improved materially between Q1 and Q2 or just operating profit dollars because there was clearly significant OpEx improvement?

Speaker Change: and the success we had in Q2.

Speaker Change: It was all of us good to see. We had double digit growth as we referenced on a demand basis.

Speaker Change: Across the high-end products, the Mediterranean products, the instruction products, and the data protection products.

Abon: Those products from a margin contribution point of view are significantly greater than the partner IP references that have been mentioned earlier. So when those businesses are growing and I think I've just mentioned the previous questions and their margin rates improved with better price discipline in the quarter, we got, if you will, leverage from both growth, as well as improvement in the gross margins, which will ultimately make its way to the operating margin for storage. And that was significant. And they have driven by some mix of geography North America that Abon mentioned earlier, but primarily driven by the core products themselves. And then obviously, your conclusion is correct. Their partner IP business was down quarter over quarter. That's less profitable for us. And the mix shifted increasingly more towards our Dell IP products.

Abon: Those products from a margin contribution point of view are significantly greater than the partner IP references that Abon mentioned earlier.

Speaker Change: So when those businesses are growing and I think I've just mentioned the previous questions and their margin rates improved with better price discipline in the quarter we got if you will leverage from both growth.

Yvonne McGill: The short answer to that is both improved.

Speaker Change: As well as improvement in the gross margins, which will ultimately make its way to the operating margin for storage.

Abon: And that was significant. And they have driven by some mix of geography North America that Abon mentioned earlier, but primarily driven by the core products themselves. And then obviously, your conclusion is correct. Their partner IP business was down quarter over quarter. That's less profitable for us. And the mix shifted increasingly more towards our Dell IP products. Yeah, sorry. I mean, sorry about that. Yeah, go ahead. I just so that the double digit growth was sequential growth and the that you were that you were seeing in those businesses.

Speaker Change: and that was significant and he has driven by some mix of geography North America that abond mentioned earlier but primarily driven by the core products themselves.

Speaker Change: And then obviously your conclusion is correct. Their partner IP business was down quarter of the quarter. That's less profitable for us. And the next shift did increasingly more towards our Dell IP products.

So perhaps you can provide a little more color on that. Thank you.

Jeffrey W. Clarke: Sure. Yvonne and I'll try to tag team this one. But I'll start with, as I mentioned previously, if you look at our Dell IP portfolio and the success we had in Q2, it was good to see. We had double-digit growth as we referenced on a demand basis across the high-end products, the mid-range products, the unstructured products and the data protection products. Those products from a margin contribution point-of-view are significantly greater than the partner IP references that Yvonne mentioned earlier. So when those businesses are growing and I think I've just mentioned in the previous questions, and their margin rates improved with better price discipline in the quarter, we got, if you will, leverage from both growth as well as improvement in the gross margins, which will ultimately make its way to the operating margin for storage. And that was significant. The thing that was driven by some mix of geography, North America that Yvonne mentioned earlier, but primarily driven by the core products themselves. And then obviously, your conclusion is correct. The partner IP business was down quarter-over-quarter. That's less profitable for us and the mix shifted increasingly more towards our Dell IP products.

Speaker Change: [inaudible]

Speaker Change: Yeah, I'm sorry about that, I mean, sorry about that, no.

Evan: Here I go, Evan

Evan: So the double-digit growth was sequential growth and that you were seeing in those businesses.

Abon: The double I see revenue growth was was up 26% for a quarter. The store. Yeah, that was your over your Tony. The core comment about double digit growth was up your. Correct. So, but, but the whole. So, yeah, I mean, if you kind of have you kind of run a year, so. Yeah, so you got to decline and converge and hyper converge infrastructure, and it is, you know, we haven't broken it out specifically, but it is obviously a large part of the business thing. And, you know, data protection to be the other word other area where there was a bit on your year. So those two offset the increases in the other four businesses we mentioned. Thank you.

And that was significant. And they have driven by some mix of geography North America that Abon mentioned earlier, but primarily driven by the core products themselves. And then obviously, your conclusion is correct. Their partner IP business was down quarter over quarter. That's less profitable for us. And the mix shifted increasingly more towards our Dell IP products.

Speaker Change: the Del Bulls. I see revenue growth was up 26% for a record. So, the full storage was Delphi.

Speaker Change: Yeah, that was your over your time, before the court comment about those of the degree I was up here, right? Correct. So, but the whole year, if you kind of, if you kind of run in your over year, so...

Speaker Change: Yes, so you've got a great line in conversion, hyper-conversion, infrastructure, and it is, you know, we have broken it out specifically, but it is obviously a large part of business in the city. And, you know, data protection and video work, other areas where there was a bit on your over year. So those two offset the increases in the other four businesses we mentioned.

Speaker: And I'll our next question comes up. Great.

Speaker Change: Thank you.

Rob Williams: Yeah, [inaudible]. I mean, sorry about that. Yes, go ahead. I just so that the double digit growth was sequential growth and the that you were that you were seeing in those businesses.

Rob Williams: Yeah, [inaudible]. I mean, sorry about that. Yes, go ahead.

Speaker: If I could just, you know, talk a little bit about CSG and Rob, Dan, thank you for all the help and support over the last few years will miss you as well. On CSG, if I may, you know, you sound very optimistic about growth here in the fourth quarter. Maybe it's just a double click on that a little bit and give us some. A guidance on what you're seeing in the pipeline or the demand indicators that, you know, that gives you confidence in that growth. As the enter calendar 25. Thank you.

Speaker Change: and I'll our next question comes on at the end of the incident with city.

Rob Williams: ahead. I just so that the double digit growth was sequential growth and the that you were that you were seeing in those businesses.

Rob Williams: ahead. I just so that the double digit growth was sequential growth and the

Rob Williams: ahead.

Toni Sacconaghi: I just--so the double-digit growth was sequential growth in the--that you were seeing in those businesses?

Speaker Change: Great, if I could just to, you know, talk a little bit about the history and Rob, Dan, thank you for all the help and support over the last.

Speaker Change: New Year's will miss you as well. On CSG by May, you know, this is sound very optimistic about who's here in the fourth quarter. Maybe he's good just double click on that a little bit and do this in.

Rob Williams: that you were that you were seeing in those businesses.

Speaker Change: and I'm a guy in some of what you're seeing in the pipeline or the demand indicators that gives you confidence in that growth as the enter calendar 25. Thank you.

Yvonne McGill: ISG revenue growth was up 26% quarter-over-quarter.

The store. Yeah, that was your over your Tony. The core comment about double digit growth was up your. Correct. So, but, but the whole. So, yeah, I mean, if you kind of have you kind of run a year, so. Yeah, so you got to decline and converge and hyper converge infrastructure, and it is, you know, we haven't broken it out specifically, but it is obviously a large part of the business thing. And, you know, data protection to be the other word other area where there was a bit on your year. So those two offset the increases in the other four businesses we mentioned. Thank you.

Toni Sacconaghi: So the storage growth-- [inaudible].

Toni Sacconaghi: So the storage growth--

Multiple: [inaudible].

Yeah, that was your over your Tony. The core comment about double digit growth was up your. Correct. So, but, but the whole. So, yeah, I mean, if you kind of have you kind of run a year, so. Yeah, so you got to decline and converge and hyper converge infrastructure, and it is, you know, we haven't broken it out specifically, but it is obviously a large part of the business thing. And, you know, data protection to be the other word other area where there was a bit on your year. So those two offset the increases in the other four businesses we mentioned. Thank you.

Rob Williams: Yes, that was year-over-year, Toni. The core comment about double-digit growth was up year-over-year.

Correct. So, but, but the whole. So, yeah, I mean, if you kind of have you kind of run a year, so. Yeah, so you got to decline and converge and hyper converge infrastructure, and it is, you know, we haven't broken it out specifically, but it is obviously a large part of the business thing. And, you know, data protection to be the other word other area where there was a bit on your year. So those two offset the increases in the other four businesses we mentioned. Thank you.

Toni Sacconaghi: Correct. So--but, but the whole-- [inaudible].

Toni Sacconaghi: Correct. So--but, but the whole--

Speaker: As the enter calendar 25. Thank you. Or I'll take a run at and then a bond can help come over the top. I mean, we remain optimistic about the refresh. I mean, I think it's reflected in our guidance that we think the refresh is shifting more towards the end of the year than we thought maybe at the middle of the year. I know all of you have done your supply base checks.

Multiple: [inaudible].

Yeah, so you got to decline and converge and hyper converge infrastructure, and it is, you know, we haven't broken it out specifically, but it is obviously a large part of the business thing. And, you know, data protection to be the other word other area where there was a bit on your year. So those two offset the increases in the other four businesses we mentioned. Thank you.

Rob Williams: Yes, so you've got a decline in conversion, hyperconverged infrastructure and it is--we haven't broken it out specifically, but it is obviously a large part of the business. And data protection would be the other area where there was a bit of decline year-over-year. So those two offset the increases in the other four businesses we mentioned.

Toni Sacconaghi: Thank you.

Operator: And our next question comes Asiya Merchant with Citi.

Speaker Change: I'll take a run-out in the Nubonkian help-out and come over to the top. I mean, we remain optimistic about the refresh.

Speaker Change: I think it's reflected in our guidance that we think the refresh is shifting.

Speaker Change: Ward towards the end of the years and we thought maybe it's the middle of the year.

Speaker: It would indicate the same thing that refresh is heading towards in the 24 into 25. Now, what's important about that is as the refresh takes longer to start history suggests it snaps back faster because the windows 10 in the life date is not moving. So we have a windows 10 in the life date. We have an aging install base of machines bought during the COVID era. All mounting to be refreshed with exciting new products built around AI and more AI applications are coming and we remain optimistic about that recovery. Calling the timing has been difficult. But the end of life is around the corner where a quarter closer, the install base is bigger and older. Exciting new products are coming applications to help productivity with end users is around the corner. And if you think about the extension of AI up to the edge and inferencing and what inferencing will be done on the edge on PC, that opportunity is immense as well.

Speaker Change: I know all of you have done your supply-based effects that would indicate the same thing that refreshes heading towards.

Speaker Change: in the 2024 and the 2025. And what's important about that is...

Speaker Change: As the refresh takes longer to start, history suggests it snaps back faster because the Windows 10 in the life date is not moving.

Asiya Merchant: Great. If I could just, you know, talk a little bit about CSG. And Rob, again, thank you for all the help and support over the last few years. We'll miss you as well. On CSG, if I may, you sound very optimistic about growth here in the fourth-quarter. Maybe if you could just double-click on that a little bit and give us some--a guidance on what you're seeing in the pipeline or the demand indicators that gives you confidence in that growth as we enter calendar '25? Thank you.

Speaker Change: So we have a windows 10 in the life state. We have an aging install base of machines bought during the COVID era.

Speaker Change: All mounting to be refreshed with exciting new products built around AI.

Speaker Change: and more AI applications are coming.

Speaker: Calling the timing has been difficult. But the end of life is around the corner where a quarter closer, the install base is bigger and older. Exciting new products are coming applications to help productivity with end users is around the corner. And if you think about the extension of AI up to the edge and inferencing and what inferencing will be done on the edge on PC, that opportunity is immense as well. When you think about running these small language models with larger memory footprints on the edge on your PC, to do amazing things and have a personal agent on your screen helping you along the way, that's all in front of us.

Speaker Change: and we remain optimistic about that recovery.

Speaker Change: Colleen the timing has been difficult.

Colleen: But the end of life is around the corner where a quarter closer, the install base is bigger and older.

As the enter calendar 25. Thank you.

Jeffrey W. Clarke: Sure. I'll take a run at and then Yvonne can help come over-the-top. I mean, we remain optimistic about the refresh. I mean, I think it's reflected in our guidance that we think the refresh is shifting and more towards the end-of-the year than we thought maybe at the middle of the year. I know all of you have done your supply base checks, it would indicate the same thing that refresh is heading towards end of '24 into '25. And what's important about that is, as the refresh takes longer to start, history suggests it snaps back faster because the Windows 10 end-of-life date is not moving. So we have a Windows 10 end-of-life date. We have an aging installed base of machines bought during the COVID era, all mounting to be refreshed with exciting new products built around AI, and more AI applications are coming. And we remain optimistic about that recovery. Calling the timing has been difficult. But the end-of-life is around the corner or a quarter closer. The installed base is bigger and older, exciting new products are coming, applications to help productivity with end users is around the corner. And if you think about the extension of AI out to the Edge in inferencing, and what inferencing will be done on the Edge on PCs, that opportunity is immense as well.

Colleen: Exciting new products for coming applications to help productivity with end users is around the corner.

Colleen: and if you think about the extension of AI out to the edge and influencing.

Colleen: and what information will be done on the edge on PCs, that opportunity is immense as well.

Colleen: When you think about running these small language models with larger memory footprint on the edge on your PC, to do amazing things and have a personal agent on your screen helping you along the way, that's all in front of us. So we remain very optimistic about that.

Speaker: So we remain very optimistic about that. Hopefully from our performance you can see that we had called a recovery a little earlier and we're calling today. It's a little further out. I'm on anything you'd add now. I think you had it, Joe. Thanks. I appreciate it.

Speaker Change: Buck played from our performance. You can see that we had called a recovery of the Lerler and we're calling today. It's a little further out.

Simeek Chatterjee: Next question.

Speaker Change: [inaudible]

Jeff: And we'll move to our next question from Simeek Chatterjee with JP Morgan. Thanks for taking my question and Rob congrats and thank you for the help. I guess Jeff, if I just go back to your comments about what you're seeing from enterprise customers in terms of AI server demand and just curious to understand. I clearly you're excited about that building pipeline that you're seeing from the enterprise side, but what you're seeing when enterprise customers come in, what is that giving you in terms of opportunity to either do like a touch on more services or storage for that matter.

Speaker Change: Thank you all for your appreciated next question.

Speaker Change: and we'll move to our next question from Samyq, Chattergy with JP Morgan.

Samyq Chattergy: Yep, thanks for taking my question and Rob Congrats and thank you for the help

Samyq Chattergy: I guess, Jeff, if I just go back to your comments about what you're seeing from Enterprise Customers in terms of AI so what do you mind?

Calling the timing has been difficult. But the end of life is around the corner where a quarter closer, the install base is bigger and older. Exciting new products are coming applications to help productivity with end users is around the corner. And if you think about the extension of AI up to the edge and inferencing and what inferencing will be done on the edge on PC, that opportunity is immense as well.

Speaker Change: and just curious to understand clearly you're excited about that building pipeline that you're seeing from the enterprise side but what you're seeing when enterprise customers come in work is that giving you in terms of opportunity to either do a touch of more services or storage for that matter and how should we think about how much of a different shield on the cross margins does that lead to when you compare to sort of what you're doing the work you're doing with the deal to use.

Jeffrey W. Clarke: The installed base is bigger and older, exciting new products are coming, applications to help productivity with end users is around the corner. And if you think about the extension of AI out to the Edge in inferencing, and what inferencing will be done on the Edge on PCs, that opportunity is immense as well. When you think about running these small language models with larger memory footprints on the Edge on your PC to do amazing things and having a personal agent on your, if you will, screen helping you along the way, that's all in front of us. So we remain very optimistic about that. Closely from our performance, you can see that we had called a recovery a little earlier and recalling today, it's a little further out. Yvonne, anything you would add?

Jeff: And how should we think about how much of a differential on the cross margins does that lead to when you compare to sort of what you're doing the work you're doing with the two tools. Sure, maybe in an order that at least I think about this.

When you think about running these small language models with larger memory footprints on the edge on your PC, to do amazing things and have a personal agent on your screen helping you along the way, that's all in front of us. So we remain very optimistic about that. Hopefully from our performance you can see that we had called a recovery a little earlier and we're calling today. It's a little further out. I'm on anything you'd add now.

Speaker Change #100: Sure, maybe in an order that at least I think about this. First of all, we still believe we're in the very, very early innings.

Jeff: First of all, we still believe we're in the very, very early innings in deployment enterprise. So we know that is we surveyed thousands of our enterprise customers. And we have a pretty good understanding of where they are in their AI journey. And if you think of this as in stages, they are truly in what we call stage zero and one trying to determine what they're going to do, what their strategy is. And a large percentage of our customers are in that state. And I think we have a pretty good represent a pretty good understanding of that given our broad market coverage with the largest sales horse and technology reaching down into small businesses and everything up to large multinationals. We have a pretty good pulse of where enterprises business or commercial customers are in that journey. And that gets us really excited that they all see the opportunity, many are experimenting, moving to piloting the technology so they can actually take advantage of the opportunities to drive predictivity or an advantage with customers or customer servers or what have you.

Speaker Change #101: and deployment enterprise. So we know that as we surveyed thousands of our enterprise customers.

So we remain very optimistic about that. Hopefully from our performance you can see that we had called a recovery a little earlier and we're calling today. It's a little further out. I'm on anything you'd add now.

Speaker Change #101: and we have a pretty good understanding of where they are in their AI journey. And if you think of this as some stages, they are truly what we call stage zero and one trying to determine what they're going to do, what their strategy is.

I think you had it, Joe. Thanks. I appreciate it.

Yvonne McGill: No, I think you hit that, Jeff.

Rob Williams: Thanks, Asiya. I appreciate it. Next question.

Jeff: And a large percentage of our customers are in that state. And I think we have a pretty good represent a pretty good understanding of that given our broad market coverage with the largest sales horse and technology reaching down into small businesses and everything up to large multinationals. We have a pretty good pulse of where enterprises business or commercial customers are in that journey. And that gets us really excited that they all see the opportunity, many are experimenting, moving to piloting the technology so they can actually take advantage of the opportunities to drive predictivity or an advantage with customers or customer servers or what have you.

Speaker Change #101: and a large percentage of our customers are in that state.

Operator: And we'll move to our next question from Samik Chatterjee with JPMorgan.

Samik Chatterjee: Hi, thanks for taking my question. And Rob, congrats and thank you for the help. I guess, Jeff, if I just go back to your comments about what you're seeing from enterprise customers in terms of AI server demand. I'm just curious to understand, clearly you're excited about that building pipeline that you're seeing from the enterprise side, but what are you seeing when enterprise customers come in? What is that giving you in terms of opportunity to either do like attach of more services or storage for that matter? And how should we think about how much of a differential on the gross margins does that lead to when you compare to sort of what you're doing, the work you're doing with the Tier 2s?

Speaker Change #101: And I think we have a pretty good representative, a pretty good understanding of that given our broad market coverage with the largest sales force and technology reaching down into small businesses and everything up to large multinationals. We have a pretty good pulse of where enterprises business are commercial.

And how should we think about how much of a differential on the cross margins does that lead to when you compare to sort of what you're doing the work you're doing with the two tools.

Speaker Change #101: Customers are in that journey, and that gets us really excited that they all see the opportunity.

Speaker Change #101: Many are experimenting, moving to piloting the technology so they can actually take advantage of the opportunities to drive productivity or an advantage with customers or customer servers or what have you.

Jeffrey W. Clarke: And in doing so, it really brings us tremendous opportunity. We've built professional services to help customers do exactly the four things they need to make progress here. Build a strategy, help them implement it, ultimately think about how they deploy the model and then adopt it and scale it to get the advantages of it. We've built services around that. We continue to scale that capability. And then because these are very complex systems, the ability to engineer and to help our customers integrate these. You just can't put this into a data center. There has to be space, it requires power. In many cases, it requires new forms of cooling. The network interconnect is very complex. The storage subsystems have to be high-speed systems, three-tier architecture systems with the flexibility and efficiency and scale to really run at high-performance. That's kind of what we do. We get excited about that opportunity and to help customers really extend from a strategy to implementation to be able to run these at-scale and to take advantage of this enormous capability is exciting. And then if you think about the use cases, the use cases are generally around large language models, small language models are coming. We're already talking about technologies like agents and agent is a buzzword of our industry today, and we've just scratched the surface of how agents are going to help each individual's productivity, help with specific skills, which provide an opportunity to take the millions of processes that are in businesses today and help automate them.

Jeffrey W. Clarke: Sure. Maybe in order that at least I think about this. First of all, we still believe we're in the very, very early innings in deployment enterprise. And we know that as we've surveyed thousands of our enterprise customers. And we have a pretty good understanding of where they are in their AI journey. And if you think of this as in stages, they are truly in what we call stage 0 and 1 trying to determine what they're going to do, what their strategy is. And a large percentage of our customers are in that state. And I think we have a pretty good represent--pretty good understanding of that, given our broad market coverage with the largest sales force and technology reaching down into small businesses and everything up to large multinationals. We have a pretty good pulse of where enterprises, business or commercial customers are on that journey. And that gets us really excited that they all see the opportunity. Many are experimenting, moving to piloting the technology, so they can actually take advantage of the opportunities to drive productivity or an advantage with customers or customer service or what have you.

Speaker Change #101: and in doing so, it really brings us tremendous opportunity. We built professional services to help customers do exactly the four things they need to make progress here.

Speaker Change #101: Bill, the strategy, helpful, mental, and ultimately think about how they deploy the model and then adopt it and scale it to get the advantages of it. We've built services around that. We continue to scale that capability.

Speaker Change #101: and then because these are very complex systems, the ability to engineer and to help our customers.

Jeff: You just can't put this into a data center. There has to be space. It requires power. In many cases, it requires new forms of cooling. The network interconnect is very complex. The storage subsystems have to be high speed systems to treat your architecture systems with the flexibility and efficiency and scale to really run at high performance. What's kind of what we do? We get excited about that opportunity and to help customers really extend from a strategy to implementation to be able to run these at scale and to take advantage of this enormous capability is exciting. And then, if you think about the use cases, the use cases of generally around large language models, small language models are coming. We're already talking about technologies like agents and agentic buzzword of our industry today, and we've just scratched the surface of how agents are going to help each individual's predictivity help with specific skills, which provide an opportunity to take the millions of processes that are in businesses today and help automate them.

Speaker Change #101: Integrate these. You just can't put this into a data center. There has to be space. It requires power. The mini cases requires new forms of cooling. The network interconnect is very complex. The storage subsystems have to be high speed systems tier.

Speaker Change #101: Treat your architecture systems with the flexibility and efficiency and scale to really run at high performance.

Speaker Change #101: What's kind of what we do? We get excited about that opportunity and to help customers really extend from a strategy to implementation, to be able to run these at scale and to take advantage of this enormous capability.

Jeff: And then, if you think about the use cases, the use cases of generally around large language models, small language models are coming. We're already talking about technologies like agents and agentic buzzword of our industry today, and we've just scratched the surface of how agents are going to help each individual's predictivity help with specific skills, which provide an opportunity to take the millions of processes that are in businesses today and help automate them.

Speaker Change #101: is exciting. And then if you think about the use cases, the use cases of generally around large language models.

Speaker Change #101: Small Language Models are coming

Speaker Change #101: We're already talking about technologies like agents and agentic buzzword of our industry today and we've just scratched the surface of how agents are going to help each individual's productivity, help with specific skills which provide an opportunity to take the millions of processes that are in businesses today and help automate them.

Jeff: That's what's in front of us, and I think we've said each of the last several calls and we'll say this call again, the margins selling to enterprises are better than the margins selling to our large, largest customers. And that's the value we continue to provide and we'll continue to build upon. I think I made reference to this as well. I think this is a very important thing. We've tuned our go-to-market model where we have a dedicated pursuit team for the largest CSPs. And we have an overlay specialty organization that covers our largest enterprise customers down to many thousands of them with AI specialized skills and then the engineering capability behind it dealt the Salesforce when each and every engagement. I know that was a lot. I think I covered the questions.

Speaker Change #102: That's what's in front of us and I think we said each of the last several calls and we'll say this call again. The margins selling to enterprises are better than the margins selling to our large, largest customers.

Speaker Change #102: and that's the value we continue to provide and we'll continue to.

Speaker Change #102: Bill DePon, I think I made reference to this as well. I think this is a very important thing. We've tuned our Go to Market Model where we have a dedicated pursuits team for the largest CSPs.

Jeff: And we have an overlay specialty organization that covers our largest enterprise customers down to many thousands of them with AI specialized skills and then the engineering capability behind it dealt the Salesforce when each and every engagement. I know that was a lot. I think I covered the questions. All right.

Speaker Change #102: and we have a overlay specialty organization that covers our largest enterprise customers down to many thousands of them with AI specialized skills and then the engineering capabilities behind it dealt the Salesforce when each and every engagement. I know that was a lot. I think I covered the questions.

Speaker: Thanks, Devon. Thanks, Tom. I appreciate it.

Speaker: Thanks, Tom. I appreciate it.

Michael Ing: I appreciate it. And we'll move to our next question from Michael Ing with Goldman Sachs. Hi, good afternoon. Thanks for the question. And I also wanted to extend my congratulations to Rob. I just have two questions if I could. First for Ivan. I wanted to ask about the low 30% ISG revenue guidance for the upcoming quarter, which implies ISG revenue is down sequentially. Could you just talk a little bit more on the drivers of that?

Speaker Change #103: All right, thanks, Jeff, and thanks so much for sharing it.

Speaker Change #104: and we'll move to our next question from Michael Ing with Goldman Sachs.

Jeffrey W. Clarke: We're already talking about technologies like agents and agent is a buzzword of our industry today, and we've just scratched the surface of how agents are going to help each individual's productivity, help with specific skills, which provide an opportunity to take the millions of processes that are in businesses today and help automate them. That's what's in front of us. And I think we've said each of the last several calls and we'll say it this call again, the margins selling to enterprises are better than the margins selling to our largest customers. And that's the value we continue to provide and we'll continue to build upon. I think I made reference to this as well. I think this is a very important thing. We've tuned our go-to-market model where we have a dedicated pursuits team for the largest CSPs and we have a overlay specialty organization that covers our largest enterprise customers down to many thousands of them with AI specialized skills and then the engineering capability behind it to help the sales force win each and every engagement. I know that was a lot. I think I covered the questions.

Michael Ing: Hi, good afternoon. Thanks for the question and I also wanted to extend my congratulations to Rob. I just have two questions if I could. You're first for Yvonne.

Michael Ing: I want to ask about the low 30% ISU revenue guidance for the upcoming quarter, which implies ISU revenue is down sequentially.

Michael Ing: What are you assuming for AI servers to happen quarter and quarter in terms of revenue? And then second for Jeff, I was just wondering if you could talk a little bit about some of the partnerships announced in the last couple of months, the new Nutanix hyperconverge partnership, the NVIDIA SuperPOD certification for the Dell power scale. Should that help drive an inflection and in storage revenues as we head into the latter part of the year and into next? You know, how material are these partnerships? and how much does it change your strategy in storage or federal? Thank you.

Speaker Change #106: He just talked a little bit more on the drivers of that. What are you assuming for AI servers to happen quarter and quarter in terms of revenue?

Speaker Change #106: and then second for Jeff, I was just wondering if you could talk a little bit about

Jeff Clarke: Some of the partnerships announced in the last couple of months.

Speaker Change #107: the new Nutanix Hyperconverge Partnership.

And we have an overlay specialty organization that covers our largest enterprise customers down to many thousands of them with AI specialized skills and then the engineering capability behind it dealt the Salesforce when each and every engagement. I know that was a lot. I think I covered the questions.

Speaker Change #108: the Nvidia SuperPod certification for the Dell Power Scale. Should that help drive an inflection and storage revenues as we head into the latter part of the year and into next?

Speaker Change #109: You know how material are these partnerships and how much is the change or strategy in storage of it all. Thank you.

Abon: Thank you. Yeah, I'll start off next your question. For Q3, we do expect ISC revenue to grow in the low 30s year-over-year for the full year in the 30s also. Traditional servers and storage are roughly in line with historical sequential business that we see. Servers will grow in the low single digits and storage will be down in the low single digits, so that's relatively normal sequentially. So that would imply that AI servers are down quarter of a quarter.

Samik Chatterjee: All right. Thanks, Jeff, and thanks. Thanks, Rob. I appreciate it.

Speaker Change #110: Yeah, I'll start off next to the question.

Speaker Change #110: For Q3, we do expect I-C revenue to grow in the...

I appreciate it.

And we'll move to our next question from Michael Ing with Goldman Sachs. Hi, good afternoon. Thanks for the question. And I also wanted to extend my congratulations to Rob. I just have two questions if I could. First for Ivan. I wanted to ask about the low 30% ISG revenue guidance for the upcoming quarter, which implies ISG revenue is down sequentially. Could you just talk a little bit more on the drivers of that?

Operator: And we'll move to our next question from Michael Ng with Goldman Sachs.

Michael Ng: Hi, good afternoon. Thanks for the question. And I also wanted to extend my congratulations to Rob. I just have two questions if I could. First for Yvonne, I wanted to ask about the low 30% ISG revenue guidance for the upcoming quarter, which implies ISG revenue is down sequentially. Could you just talk a little bit more on the drivers of that? What are you assuming for AI servers to happen quarter-on-quarter in terms of revenue? And then second, for Jeff, I was just wondering if you could talk a little bit about some of the partnerships announced in the last couple of months, the new Nutanix Hyperconverged partnership, the NVIDIA SuperPOD certification, certification for the Dell PowerScale. Should that help drive an inflection in storage revenues as we head into the latter part of the year and into next? How material are these partnerships? How much does it change your strategy in storage, if at all? Thank you.

Speaker Change #112: Low 30s, year every year and for the full year and 30s all set.

Speaker Change #113: I'm traditional servers and storage are roughly in line with historical sequential business that we see.

Speaker Change #114: Service will grow in the low single digits, and storage will be down in the low single digits. So that's relatively normal to punch a lake. So that would imply that AI servers are down quarter over quarter. Now that's said, you know, shipments are...

Abon: Now that said, shipments are, we're up in the second quarter to $3.1 billion. The backlog is sitting at $3.8 billion. The pipeline, as Jeff already talked about, is a multiple of that backlog and enterprise orders, customers and pipeline are all growing. So with all that said, I would say, if we have the GPUs and the customers are ready, we're fully motivated and ready to ship more AI servers in the third quarter. But that is what's embedded in our guide.

Speaker Change #114: or were up in the second quarter to $3.1 billion. The backlog is sitting at $3.8 billion. The pipeline, as Jeff's already talked about, is a multiple of that backlog.

Jeff Clarke: and Enterprise orders, customers and pipeline are all growing. So with all that said, I would say if we have the GPUs...

Speaker Change #115: and the customers are ready. We're fully motivated and ready to ship more AI servers in the third quarter. But that is what's embedded in our guide. Also.

Abon: But that is what's embedded in our guide. Let me see if I can work my way through the partners question and what's happening. I think there are two distinct things. One is you think of HCI as a category. At least from our view, it really is a category of products for the single hypervisor. It's really meant to drive simplicity and ease of use for that use case. And if you think about what customers, particularly enterprise customers, in fact, almost solely enterprise customers, large and small are as they think about AI, they don't have space.

Speaker Change #116: Let me see if I can work my way through the partners question and what's happening. I think there are two distinct things.

Thank you.

Yvonne McGill: Yes, I'll start off, Mike, your question. For Q3, we do expect ISG revenue to grow in the low-30s year-over-year, and for the full-year in 30s also. Traditional servers and storage are roughly in-line with historical sequential business that we see. Servers will grow in the low-single digits and storage will be down in the low-single digits. So that's relatively normal sequentially. So that would imply that AI servers are down quarter-over-quarter. Now that said, shipments are or were up in the second-quarter to $3.1 billion. The backlog is sitting at $3.8 billion. The pipeline, as Jeff has already talked about, is a multiple of that backlog. And enterprise orders, customers and pipeline are all growing. So with all that said, I would say if we have the GPUs and the customers are ready, we're fully motivated and ready to ship more AI servers in the third-quarter, but that is what's embedded in our guide. Awesome

Speaker Change #117: One of you think of HCI's Academy Glory. At least from our view, it really is a category of products for the single hypervisor. It's really meant to drive simplicity and ease of use for that use case.

Speaker Change #117: And if you think about what customers, particularly enterprise customers, in fact, almost solely enterprise customers, large and small.

Abon: They need to make space. They need to create room for bringing AI gear in. So there's a consolidation of foot in business. And HCI is a wonderful tool to be able to consolidate traditional applications. We have a good product with VX Rail. And we clearly added to that to give customers choice with our Red Hat product, with our Azure product, and the Nutanix product that you described. And we'll continue to do that. But probably what I think is really interesting is these new modern workloads. And certainly all those around accelerated computing are demanding more performance, more scale, more flexibility, more efficiency.

Speaker Change #117: are, as they think about AI, they don't have space, they need to make space, they need to create room for bringing AI gear in so there's a consolidation of foot.

Speaker Change #117: in Business.

Speaker Change #118: and HCI is a wonderful tool to be able to consolidate traditional applications. We have a good product with VX Rail and we clearly added to that to give customers choice with our Red Hat product with our Azure product and the Nutanix product that you described. And we'll continue to do that.

Abon: But probably what I think is really interesting is these new modern workloads. And certainly all those around accelerated computing are demanding more performance, more scale, more flexibility, more efficiency. I think I've said this before. You have to feed the beast. These new architectures are demanding from data. They gobble data up and you need to feed it in a high performance way. We think the best way to do that is through a three-tier architecture.

Speaker Change #118: Probably what I think is really interesting is these new modern workloads and certainly all those around accelerated computing are demanding more performance, more scale, more flexibility, more efficiency.

But that is what's embedded in our guide.

Speaker Change #119: I think I've said this before. You have to feed the beast. These new architectures are demanding from data. They gobble data up and you need to feed it in a high performance way. We think the best way to do that is to re-treat your architecture.

Michael Ng: Awesome.

Jeffrey W. Clarke: Let me see if I can work my way through the partners question and what's happening. I think there are two distinct things. One, if you think of HCI as a category, at least from our view, it really is a category of products with a single hypervisor. It's really meant to drive simplicity and ease-of-use for that use case. And if you think about what customers, particularly enterprise customers, in fact, almost solely enterprise customers, large and small are, as they think about AI, they don't have space. They need to make space. They need to create room for bringing AI gear in. So there's a consolidation of foot in business. And HCI is a wonderful tool to be able to consolidate traditional applications. We have a good product with VxRail and we clearly added to that to give customers choice with our Red Hat product, with our Azure product and the Nutanix product that you described. And we'll continue to do that. Probably what I think is really interesting is these new modern workloads and certainly all those around accelerated computing are demanding more performance, more scale, more flexibility, more efficiency.

Abon: We think it meets the demand, the high demands of these new workloads. We can drive high performance. We can scale up. We can scale out. We can drive the flexibility and efficiency needed. And getting super pod certification with our power scale products, the F910 and 710 is essential to be able to work in that environment, bringing the very best of our company going forward. And it's why we made the announcements. It's we're talking about announcement in May earlier this past quarter about project lightning bringing a high speed parallel file system to the forefront as well. Because that's another opportunity to expand our position in storage and quite frankly expand our margin opportunity around storage around GPUs and around what's happening in AI. All right, good. Thanks, Mike. Thanks for your time.

Speaker Change #119: We think it meets the demand, the high demands of these all.

Speaker Change #119: New Workloads. We can drive high performance, we can scale up, we can scale out, we can drive the...

Speaker Change #120: Flexibility and efficiency needed and getting super pod certification with our power skill products.

Speaker Change #120: The F-910 and 710 is essential to be able to work in that environment, bringing the very best of our company going forward and it's why we made the announcements that we're talking about announcement.

Speaker Change #120: and May earlier this past quarter about Project Lightning bringing a high speed parallel file system to the forefront as well because that's another opportunity.

Speaker Change #120: to expand our position in storage and quite frankly expand our margin opportunity around storage, around GPUs, and around what's happening in AI.

But probably what I think is really interesting is these new modern workloads. And certainly all those around accelerated computing are demanding more performance, more scale, more flexibility, more efficiency.

Speaker: You're welcome.

Operator: Our next question comes from Wamsi Mohan with Bank of America.

Speaker Change #120: Good, thanks Mike. Thanks for coming.

Wamsi Mohan: Yes, thank you. And Rob, congrats as well. Yvonne, you just said quarter-on-quarter decline in AI server revenues, your backlog is flat quarter-on-quarter in AI servers. Is that really reflective of just Blackwell delays? And does your backlog include the liquid-cooled offerings like XE9680L? And should we expect an acceleration in that backlog then over the next several quarters? And Jeff, you noted higher margins in enterprise consistently. Can you also comment on where sovereign might fit in that? And can you also help us with which models do you think will drive Enterprise and Sovereign versus maybe 9680 primarily at Tier-2 CSPs? Thank you so much.

Speaker Change #121: You're welcome.

Speaker Change #122: Our next question comes from Womsey, Mohan, with Bank of America.

Jeffrey W. Clarke: I think I've said this before, you have to feed the beast. These new architectures are demanding some data, they gobble data up and you need to feed it in a high-performance way. We think the best way to do that is through a three-tier architecture. We think it meets the demand--the high demands of these new workloads. We can drive high performance, we can scale-up, we can scale-out. We can drive the flexibility and efficiency needed and getting SuperPOD certification with our PowerScale products, the F910 and F710 is essential to be able to work in that environment, bringing the very best of our company going-forward and it's why we made the announcement since we're talking about announcements. In May, earlier this past quarter about Project Lightning bringing a high-speed parallel file system to the forefront as well because that's another opportunity to expand our position in storage and quite frankly, expand our margin opportunity around storage, around GPUs and around what's happening in AI.

Womsey, Mohan: Hi, yes, thank you and Rob, congrats as well.

Yvonne McGill: Yvonne, you just said quarter and quarter decline in AS server revenues, you're back while this black quarter and quarter in AS servers.

Speaker Change #124: It's a really reflective, we'll just black weld the laser and that's your backlog, including the liquid cooled offering with like XC-9680L and should we expect an acceleration in that backlog, then, over the next several quarters.

We think it meets the demand, the high demands of these new workloads. We can drive high performance. We can scale up. We can scale out. We can drive the flexibility and efficiency needed. And getting super pod certification with our power scale products, the F910 and 710 is essential to be able to work in that environment, bringing the very best of our company going forward. And it's why we made the announcements. It's we're talking about announcement in May earlier this past quarter about project lightning bringing a high speed parallel file system to the forefront as well. Because that's another opportunity to expand our position in storage and quite frankly expand our margin opportunity around storage around GPUs and around what's happening in AI.

All right, good. Thanks, Mike. Thanks for your time.

Rob Williams: All right. Good. Thanks, Mike. Next question--you're welcome.

Thanks for your time. You're welcome.

Jeff Clarke: and Jeff.

Jeff Clarke: You noted higher margins in enterprise consistently, can you also comment on where Robert might fit in that in that end?

Speaker Change #125: Can you also help us with which models do you think we'll drive Enterprise and Solver and we're just maybe 9680 primarily at Tier 2 CSB's, thank you so much.

Speaker: Thank you so much.

Rob Williams: All right. You all are killing me on the multiple questions.

Jeffrey W. Clarke: Okay. You need one question, one question. Rob, you need one question is three or four. Let me see if I can work my way through that. So when I think of the backlog Wamsi, I think, adding opportunity of deliveries from customers next quarter and then in Q4. And then clearly into next year and that implies Blackwell. We have sold our most advanced architecture aligned to Blackwell to a number of customers. We have sold H100s and H200s and availability, more importantly, customer availability to take the product, which is what Yvonne is reflecting in our guidance. She didn't make a demand statement, she made a shipment statement. So demand with that five-quarter pipeline that I described that is now multiples of our backlog is converting the backlog or converting that into orders as quickly as we can. That opportunity is in all sorts of architectures, the vast majority with NVIDIA, H100s, H200s and Blackwell, as well as a couple of others opportunities around AMD and Intel, but the vast majority is NVIDIA.

Speaker Change #126: All right, y'all are killing me on the table, quick, all one, we'll probably need one question, one question, Rob, and the union one question is three or five, I know, let me see if I can work my way through that. So when I think it's a backlog, one, see, I think.

Speaker Change #127: Ed in opportunity of deliveries for customers next quarter, and then in 24, and then clearly into next year, and then implies Blackwell. We have sold our most advanced architecture.

Jeff: We have sold H 100s and H 200s and availability. More importantly, customer availability is take the product, which is what Avant is reflecting in our guidance. She didn't make a demand statement. She made a shipment statement. So demand with that five quarter pipeline that I described that is now multiples of our backlog is converting the backlog or current converting that into orders this quickly as we can. That opportunity is in all sorts of architectures, the vast majority within video, H 100s, H 200s and black black well as well as a couple of others opportunities around AMD and Intel. That opportunity is in video.

Speaker Change #128: Align to Blackwell to a number of customers. We have sold H-100s and H-200s and availability. More importantly, customer availability has taken the product which is what Yvonne is reflecting in our guidance.

Speaker Change #129: She didn't make a demand statement, she made a shipment statement.

Speaker Change #130: So the man with that five-quarter pipeline that I described that is now multiples of our backlog is converting the backlog or current converting that into orders this quickly as we can.

Speaker Change #130: That opportunity is in all sorts of architectures, the vast majority within video, H-100, H-200, and Blackwell, as well as a couple of other opportunities around AMD and Intel. But the vast majority is in video.

Jeff: That opportunity is in video. So our work as a pursuits team, selling to enterprise is to get the order can obviously convert that pipeline into the opportunity into the order and get in the backlog and then our supply chain teams needs to get the parts, which isn't availability has improved continues to improve. I think Jensen made reference to that yesterday that availability will continue to improve that will help customers deploy and customers have to be ready to deploy. That's what we're working through. That's the best reflection of that of interpreting those signals into the guidance that Avant talked about is what we know today and obviously we're trying to improve that.

Speaker Change #130: So, our work as a pursuits team, something to enterprise is to get the order, can, obviously, convert that pipeline into the opportunity, into the order, and get in the backlog, and then our supply chain teams need to get the parts.

Speaker Change #130: which isn't availability has improved, continues to improve. I think Jensen made reference to that yesterday that availability will continue to improve, and that will help customers deploy and customers have to be ready to deploy.

Speaker Change #130: That's what we're working through, that's the best reflection of that in interpreting those signals into the guidance that Avon talked about is what we know today.

Aaron Rakers: And you asked about sovereign our opportunities and sovereign I think are large and immense as I described in our prepared remarks. As it stands now none of the five quarter pipeline reflects the sovereign opportunity of any great size. All right, thanks for the question. Let's go to the next one. Our next question comes from Aaron Rakers with Wells Fargo. Yeah, thanks for taking the question. Rob, on your last call, I'll stick to the one question and congrats to you and Paul.

Speaker Change #131: and obviously we're trying to improve that and you asked about sovereign, our opportunities in sovereign I think are large and immense as I described in our prepared remarks.

Speaker Change #132: As it stands now, none of the five-quarter pipeline reflects the sovereign opportunity of any great sucks.

Speaker Change #133: Alright, thanks for the question one, this looks...

Speaker Change #134: Good luck next time.

Speaker Change #134: Our next question comes from Erin Rakers with Wells Fargo.

Erin Rakers: Yeah, thanks for taking the question, Rob, on your last call, I'll stick to the one question, and congrats to you and Paul.

Aaron Rakers: I guess my question is not AI. It's actually on the traditional server side, you know, looking at the numbers, it looks like you've seen a pretty good uptick in this last quarter. I'm just curious of how you would characterize, I'll call it the pipeline of opportunity that you're seeing in the traditional server market, you know, the duration of demand, just kind of thinking about that, you know, that potential kind of recovery cycle that you're seeing outside of these AI servers for traditional servers. Thank you.

That opportunity is in video.

Erin Rakers: I guess my question is not AI, it's actually on the traditional server side, you know, looking at the numbers, it looks like you've seen a pretty good uptick in this last quarter. I'm just curious of how you would characterize.

Jeffrey W. Clarke: So our work as a pursuits team selling to enterprise is to get the order, can obviously convert that pipeline into the opportunity into the order and get into backlog, and then our supply chain team needs to get the parts, which isn't--availability has improved, it continues to improve. I think Jensen made reference to that yesterday that availability will continue to improve. That will help customers deploy and then customers have to be ready to deploy. So that's what we're working through. That's the best reflection of that of interpreting those signals into the guidance that Yvonne talked about is what we know today. And obviously, we're trying to improve that. And you asked about sovereign. Our opportunities in sovereign, I think are large and immense as I described in our prepared remarks. As it stands now, none of the five-quarter pipeline reflects the sovereign opportunity of any great size.

Erin Rakers: I'll call it the pipeline of opportunity that you're seeing in the traditional server market, you know, the duration of demand, just kind of thinking about that, you know, that potential kind of recovery cycle that you're seeing in outside of these AI servers for traditional servers. Thank you.

Aaron Rakers: Thank you. Great question, Aaron, thanks. So maybe a couple of things that to reinforce the momentum we're seeing is now five quarters in a row of sequential growth, three quarters in a row of year-to-year growth. We are seeing unit growth, we are seeing TRU expansion by a more cores, more memory, more storage. And I think three things are driving the demands in course servers today. The first is we're coming out of the longest digestion period ever.

Speaker Change #136: Great questioners, thanks. So maybe a couple of things that's a reinforced moment that we're seeing is now five quarters in a row of sequential growth.

Speaker Change #136: Three quarters in a row of year of a year of growth.

Speaker Change #136: We are seeing unit growth, we are seeing TRU expansion by a more core, more memory, more storage.

And you asked about sovereign our opportunities and sovereign I think are large and immense as I described in our prepared remarks. As it stands now none of the five quarter pipeline reflects the sovereign opportunity of any great size.

Speaker Change #136: and I think three things are driving the demands in course servers today. The first is we're coming out of the longest digestion period ever, it was a quarter two years.

Aaron Rakers: It was a quarter two years, the install basis hold. And as it's aged, what I'll link to a conversation I just made moments ago, customers are looking for rooms to put AI into their infrastructure. And to do that, we think there's a consolidation that is beginning to occur to make room. And that consolidation is important because the new technologies today are incredibly more efficient than what you might root be replacing that's four or five years old. For example, if I was to look at a 14G product we shipped for plus years ago to a 16G that we shipped today, our product today has two and a half to three times more cores in it. It's 25 to 35 percent more power efficient and a single 16G server can replace three to five 14G servers on a rack. Consolidation is going to occur because that space and power is needed. And then lastly, as I think about it, we've made some references to this in the past. Workloads are coming back from the cloud. They're repatriating. And as they repatriate, they got to go somewhere. They're coming back on prem on servers and storage. Those are the three things I want to.

Speaker Change #136: the Install Base is Old, and as it's aged, what I'll link to a conversation I just said made moments ago.

All right, thanks for the question. Let's go to the next one. Our next question comes from Aaron Rakers with Wells Fargo. Yeah, thanks for taking the question. Rob, on your last call, I'll stick to the one question and congrats to you and Paul.

Rob Williams: All right. Hi, thanks for the question, Wamsi. Let's go to the next one.

Our next question comes from Aaron Rakers with Wells Fargo. Yeah, thanks for taking the question. Rob, on your last call, I'll stick to the one question and congrats to you and Paul.

Operator: Our next question comes from Aaron Rakers with Wells Fargo.

Speaker Change #136: Customers are looking for room to put AI into their infrastructure and to do that we think there's a consolidation that is beginning to occur to make room.

Aaron Rakers: Yes, thanks for taking the question. Rob, on your last call, I'll stick to the one question and congrats to you and Paul. I guess my question is not AI. It's actually on the traditional server side. Looking at the numbers, it looks like you've seen a pretty good uptick in this last quarter. I'm just curious of how you would characterize, I'll call it, the pipeline of opportunity that you're seeing in the traditional server market, the duration of demand, just kind of thinking about that potential kind of recovery cycle that you're seeing in outside of these AI servers for traditional servers? Thank you.

Speaker Change #136: and that consolidation is important because the new technologies today are incredibly more efficient than what you might be replacing that's four or five years old.

Speaker Change #136: For example, if I was to look at a 14G product we ship for plus years ago to a 16G that we ship today.

Aaron Rakers: For example, if I was to look at a 14G product we shipped for plus years ago to a 16G that we shipped today, our product today has two and a half to three times more cores in it. It's 25 to 35 percent more power efficient and a single 16G server can replace three to five 14G servers on a rack. Consolidation is going to occur because that space and power is needed. And then lastly, as I think about it, we've made some references to this in the past. Workloads are coming back from the cloud. They're repatriating. And as they repatriate, they got to go somewhere. They're coming back on prem on servers and storage. Those are the three things I want to.

Speaker Change #136: Our product today has two and a half to three times more co-resented, it's 25 to 35% more power efficient in a single 16G server can replace three to five 14G servers on Iraq.

Thank you.

Jeffrey W. Clarke: Sure, great. Great question, Aaron. Thanks. So maybe a couple of things to reinforce the momentum we're seeing is now five quarters in a row of sequential growth, three quarters in a row of year-over-year growth. We are seeing unit growth. We are seeing TRU expansion, i.e., more cores, more memory, more storage. And I think three things are driving the demands in course servers today. The first is we're coming out-of-the longest digestion period ever. It was eight quarters, two years. The installed base is old. And as it's aged, what I'll link to a conversation I just said made moments ago is that customers are looking for room to put AI into their infrastructure. And to do that, we think there's a consolidation that is beginning to occur to make room. And that consolidation is important because the new technologies today are incredibly more efficient than what you might be replacing that's four or five years-old. For example, if I was to look at a 14G product we shipped four-plus years ago to a 16G that we ship today, our product today has 2.5 times to 3 times more cores in it. It's 25% to 35% more power-efficient and a single 16G server can replace 3 to 5 14G servers in a rack. So consolidation is going to occur because that space and power is needed. And then lastly, as I think about it, we've made some references to this in the past. Workloads are coming back from the cloud, they're repatriating. And as they repatriate, they got to go somewhere and they're coming back on-prem on servers and storage. Those would be the three things I point to.

Speaker Change #136: Consolidation is going to occur because that space in power is needed.

Speaker Change #136: And then lastly, as I think about it, we've made some references to this in the past. Workloads are coming back from the cloud, they're repatriating, and as they repatriate, they gotta go somewhere that come back on prem on servers and storage. Those to be the three things I've wanted.

Aaron Rakers: Workloads are coming back from the cloud. They're repatriating. And as they repatriate, they got to go somewhere. They're coming back on prem on servers and storage. Those are the three things I want to. All right. Hey, thanks Aaron. I appreciate you playing with us here. Thank you Aaron. We appreciate that. Let's move to the next question.

Speaker Change #137: All right. Hey, thanks Aaron. I appreciate you playing with us here. Thank you, Aaron. We appreciate that. Let's move to the next question.

Speaker Change #138: and our next question comes from David Vote with UBS.

David vote: Great guys, thanks for taking my question and Rob, congrats again and Paul congrats and I'm going to stick to one question as well.

David vote: You know, obviously you were clear about the GPU and the delivery constraints on the AI server side. But how are you thinking about how that gets reconciled as we move through your fiscal year to next year? What is it, more GP availability? What are the gating factors?

Jeff: And our next question comes from David Vote with UBS. Great guys. Thanks for taking my question and Rob congrats again and Paul congrats. And I'm going to stick to one question as well. You know, obviously you were clear about the GPU and the delivery constraints on the AI server side. But how are you thinking about how that gets reconciled as we move through your fiscal year to next year? Is it more GPU availability?

Jeffrey W. Clarke: For example, if I was to look at a 14G product we shipped four-plus years ago to a 16G that we ship today, our product today has 2.5 times to 3 times more cores in it. It's 25% to 35% more power-efficient and a single 16G server can replace 3 to 5 14G servers in a rack. So consolidation is going to occur because that space and power is needed. And then lastly, as I think about it, we've made some references to this in the past. Workloads are coming back from the cloud, they're repatriating. And as they repatriate, they got to go somewhere and they're coming back on-prem on servers and storage. Those would be the three things I point to.

Speaker Change #140: but you're thinking about and does that mean as we exit this year.

Speaker Change #141: You're still going to see some constraints in terms of the ability to convert backlog in orders and to revenue and we should expect backlog to continue to grow at a faster cliff until that's resolved at some point. I would imagine at some point next year. So any thought or help there would be a lot? Well, what I hope we convey to supplies and proving.

Jeff: What are the gating factors that you're thinking about? And does that mean as we exit this year, you're still going to see some constraints in terms of the ability to convert backlog and orders into revenue. And we should expect backlog to continue to grow at a faster clip until that's resolved at some point I would imagine it, at some point next year. So any thought or help they would want to bring?

Speaker Change #142: Supply is improving.

Speaker Change #143: The appointments are in scheduled deliveries to customers as what we have to manage. Again, much of this is very complex deployments. Readiness of a day to center, readiness of power, readiness of cooling if it's direct liquid cooling, the ability to have water in the day to center.

Workloads are coming back from the cloud. They're repatriating. And as they repatriate, they got to go somewhere. They're coming back on prem on servers and storage. Those are the three things I want to.

All right. Hey, thanks Aaron. I appreciate you playing with us here. Thank you Aaron. We appreciate that. Let's move to the next question.

Rob Williams: All right. Hi, thanks, Aaron. I appreciate you playing with us here.

Jeffrey W. Clarke: What I hope we conveyed is, supply is improving and supply is improving. Our deployments and scheduled deliveries to customers is what we have to manage through. Again, much of this is very complex deployments, readiness of a data center, readiness of power, readiness of cooling, if it's direct liquid cooling, the ability to have water in the data center. All of that infrastructure has to be put in-place and coordinated with the delivery of a GPU and a server. And that's what we're working through. There's clearly opportunities that we're working across our customer set of what technologies they want to deploy, urgent need, if it's a need that can go into next year, they're clearly picking technology that will be available next year. So it's that composition of demand that we're trying to translate into shipments that were--again, we're reflecting in our guidance and this is our best understanding of it today. Again, try to reinforce that our five-quarter pipeline is multiples of the backlog. There's demand out there. Our Pursuit teams are out working to convert that into orders. And as it converts into orders, an improving supply situation that we have to go work on.

Speaker Change #143: The all of that infrastructure has to be put in place and coordinated with the delivery of a GPU in the server.

Thank you Aaron. We appreciate that. Let's move to the next question.

Jeffrey W. Clarke: Thank you, Aaron.

Rob Williams: We appreciate that. Let's move to the next question.

Operator: And our next question comes from David Vogt with UBS.

Speaker Change #143: and that's what we're working through. There's clearly opportunities that we're working across our customer set of what technologies they want to deploy.

David Vogt: Great guys. Thanks for taking my question. And Rob, congrats again and Paul, congrats. And I'm going to stick to one question as well. Obviously, you were clear about the GPU and the delivery constraints on the AI server side. But how are you thinking about how that gets reconciled as we move through your fiscal year into next year. Is it more GPU availability? What are the gating factors that you're thinking about? And does that mean as we exit this year, you're still going to see some constraints in terms of the ability to convert backlog and orders into revenue and we should expect backlog to continue to grow at a faster clip until that's resolved at some point, I would imagine at some point next year. So any thought or help there would be--

Speaker Change #143: Mergent need. If it's a need that can go into next year, they're clearly picking technology that will be available next year. So it's that composition of the man that we're trying to translate into shipments that we're, again, we're, we're flooding in our guidance.

Jeff: And that's where we're working we're working through. There's clearly opportunities that we're working across our customers set of what technologies what technologies they want to deploy urgent need if it's a need that can go into next year they're clearly picking technology that will be available next year. So it's that composition of demand. That we're trying to translate into shipments that we're again we're we're flooding in our guidance and this is our best understanding of it today again try to reinforce by quarter pipeline is multiple so the backlog there's demand out there our pursuit teams are out working to convert that into orders. And as it converts into orders and improving supply situation that's what we have to work on.

Speaker Change #143: and this is our best understanding of it today. Again, try to reinforce.

Speaker Change #143: 5-quarter pipeline is multiple so the backlog there's demand out there.

Speaker Change #143: are for suit teams or out, working to convert that into orders.

Speaker Change #143: and as it converts into orders and improving supply situation, it's a way to work on it. Yeah, we do expect to grow up again next year, right? And we expect AI momentum to continue, and we expect, as we talked about a little bit previously, the CSG business to grow also. And so we're really excited about next year, and as we get closer to it, we'll update you on our expectations.

Jeff: And as it converts into orders and improving supply situation that's what we have to work on. Yeah, we I mean we do expect to grow again next year right and we expect AI momentum to continue and we expect as we talked about a little bit previously the CSG business to grow also and so we're really excited about next year and as we get closer to it we'll update you on our expectations. Great, thanks Jeff. I appreciate the question. Congrats again Rob. Thanks David. You bet. Next question.

Speaker Change #143: Thanks Jeff, I appreciate the question. Thanks again, Rob. Thanks, David.

Speaker Change #144: Next question.

Speaker Change #145: And our next question comes from Simon's Leapold with Raymond James.

Speaker Change #146: Thank you, and Rob, congratulations, congratulations to Paul as well.

Jeffrey W. Clarke: There's clearly opportunities that we're working across our customer set of what technologies they want to deploy, urgent need, if it's a need that can go into next year, they're clearly picking technology that will be available next year. So it's that composition of demand that we're trying to translate into shipments that were--again, we're reflecting in our guidance and this is our best understanding of it today. Again, try to reinforce that our five-quarter pipeline is multiples of the backlog. There's demand out there. Our Pursuit teams are out working to convert that into orders. And as it converts into orders, an improving supply situation that we have to go work on.

Speaker Change #147: Um, I'm gonna...

Simon Leapold: Stick to the one question as well. I wanted to see if you could unpack a little bit. Your thoughts on the storage trend is related to AI. I think in the past you've talked about a lag effect behind the compute side of the business.

Simon Leopold: Our next question comes from Simon Leopold with Raymond James. Thank you and Rob congratulations congratulations to Paul as well. I'm going to stick to the one question as well. I wanted to see if you could unpack a little bit your thoughts on the storage trend is relate to AI. I think in the past you've talked about a lag effect behind the compute side of the business. I'm wondering if you could talk about how you expect storage to benefit in terms of degree in timing.

Speaker Change #149: I'm wondering if you could talk about how you expect storage to benefit in terms of the green timing. Thanks.

Speaker Change #150: I'll be back with you.

Speaker Change #151: Well, I think consistent with our previous discussions and what I've tried to highlight today is the opportunity for storage is vast, it's large, again, deep.

And as it converts into orders and improving supply situation that's what we have to work on.

Speaker Change #152: These large language models can assume lots of data.

Simon Leopold: Thanks. But I think consistent with our previous discussions and what I've tried to highlight today is the opportunity for storage is vast it's large. Again, these large language models consume lots of data and they needed fast. So the opportunity for us is re-architecting improving performance more IOPS in the data categories that are most interesting to our customers here. The fastest growing category is unstructured. When you look at what Dell is doing in the structured storage space we are investing more, in Unstructured Storage, our own proprietary IP.

Yeah, we I mean we do expect to grow again next year right and we expect AI momentum to continue and we expect as we talked about a little bit previously the CSG business to grow also and so we're really excited about next year and as we get closer to it we'll update you on our expectations. Great, thanks Jeff. I appreciate the question. Congrats again Rob. Thanks David. You bet. Next question.

Yvonne McGill: Yes. I mean, we do expect to grow again next year, right? And we expect AI momentum to continue and we expect, as we talked about a little bit previously, the CSG business to grow also. And so we're really excited about next year. And as we get closer to it, we'll update you on our expectations.

Speaker Change #153: and they needed fast.

Speaker Change #153: So the opportunity for us is re-architecting improving performance, more IOTs in the data categories that are most interesting too.

Great, thanks Jeff. I appreciate the question. Congrats again Rob. Thanks David. You bet. Next question.

David Vogt: Great, thanks Jeff. I appreciate the question. Congrats again Rob.

David Vogt: Great. Thanks, Jeff. Thanks Yvonne.

David Vogt: I appreciate the question. Congrats again Rob.

Rob Williams: I appreciate the question.

Speaker Change #153: Our customers here, the fastest growing category is unstructured.

David Vogt: Congrats again, Rob.

Rob Williams: Thanks, David. You bet. Next question.

Operator: And our next question comes from Simon Leopold with Raymond James.

Speaker Change #153: When you look at what Dell is doing in the structured storage space, we are investing more.

Simon Leopold: Thank you. And Rob, congratulations. Congratulations to Paul as well. I'm going to stick to the one question as well. I wanted to see if you could unpack a little bit your thoughts on the storage trend as it relates to AI. I think in the past, you've talked about a lagged effect behind the compute side of the business. I'm wondering if you could talk about how you expect storage to benefit in terms of degree and timing. Thanks.

Simon Leopold: Our scale, as an example, building on the F710-910 Project Lightning, our parallel file system, the opportunity to help customers provide that data to these GPU engines in the form of moving from text to rich media types like video, audio, other forms of 3D images and complex data sets like that, different modalities, that is what we're building high performance storage subsystems for, and it's a huge opportunity for us. Both from our largest customers that buy today and enterprise customers that buy into the future. I hope that helps. Yeah, hey, thanks, Simon.

Speaker Change #153: An unstructured storage, our own proprietary IP, our scale as an example building on the F-710-910 project lightning, our parallel file system, the opportunity to help customers.

Speaker Change #153: Proved that data to these GPU engines and the form of moving from text to rich media types like video, audio, other forms of 3D images and complex data sets like that, different modalities. That is what we're building.

Thanks.

Jeffrey W. Clarke: Well, I think consistent with our previous discussions and what I've tried to highlight today is the opportunity for storage is vast, it's large. Again, these large language models consume lots of data, and they need it fast. So the opportunity for us is rearchitecting, improving performance, more IOPS in the data categories that are most interesting to our customers here. The fastest-growing category is unstructured. When you look at what Dell is doing in the structured storage space, we are investing more on in unstructured storage apart from our own proprietary IP. Our scale, as an example, building on the F710, 910, Project Lightning, our parallel file system, the opportunity to help customers provide that data to these GPU engines in the form of moving from text to rich media types like video, audio, other forms of 3D images and complex datasets like that, different modalities. That is what we're building high-performance storage subsystems for. And it's a huge opportunity for us, both from our largest customers that buy today and enterprise customers that buy into the future. I hope that helps.

Speaker Change #153: Hi, performance, storage subsystems for, and as a huge opportunity for us.

Speaker Change #154: Both from our largest customers that buy today and enterprise customers that buy into the future. I hope that helps. Yeah, hey, thanks. We're going to try and get one last question in here real quick. So, please one question only.

Jeff: We're going to try and get one last question in here real quick. And our final question comes from Stephen Fox with Fox Advisors. Yeah, thanks for squeezing me, and I assume the only reason Rob is retiring because he has a big book deal coming or something, but congrats. So I guess just for my one question, I mean there's been, there was a lot of talk in different metrics on pricing, and also a lot of talk in terms of etc.

Speaker Change #154: and our final question comes from Stephen Fox with Fox Advisors.

Stephen FOX: Yeah, thanks for squeezing me and I assume the only reason Rob is retiring because he has a big book deal coming or something. But congrats to him.

Stephen FOX: So, I guess just from my one question, I mean, there was a lot of talk in different metrics on pricing and also a lot of talk in terms of mix, et cetera, I guess, from a big picture, standpoint Jeff, like, how do you feel about?

Jeff: I guess from a big picture standpoint Jeff, like how do you feel about just available pricing power versus your ability to offset new market entrance or just more competitive entrance on any of your areas of expertise going forward into next year. It seems like that's going to come up a couple of times. I'm just wondering if you can summarize it. Thanks. I'm making an assumption, so I'm going to clarify in AI and GPU.

Our scale, as an example, building on the F710-910 Project Lightning, our parallel file system, the opportunity to help customers provide that data to these GPU engines in the form of moving from text to rich media types like video, audio, other forms of 3D images and complex data sets like that, different modalities, that is what we're building high performance storage subsystems for, and it's a huge opportunity for us. Both from our largest customers that buy today and enterprise customers that buy into the future. I hope that helps.

Speaker Change #156: Just available pricing power versus your ability to offset new market entrance or just more competitive entrance on any of your areas of expertise going forward into next year. Seems like that's been a come up a couple of times that's just wondering if you can summarize it. Thanks.

Speaker Change #157: I'm making an assumption so I'm going to clarify in AI.

Jeff: Actually, I mean, yeah, yeah, the infrastructure broadly across the portfolio, yeah, yeah, just strategically. Thank you. Well, if you are our industry has always been competitive, I do not expect that to change, whether that's with new entrance or traditional competitors that exist in each of our categories. So if I was to look at commercial PCs, clearly as a refreshed is slower in starting than all of us would like, it's a competitive environment today.

Jeffie: and Jeffie. Yeah. The Francis Church of Warmea passed the Portfolio. From the Portfolio. Yeah. Just strategically. Thank you.

Speaker Change #159: Well, if you are in this tree has always been competitive.

Rob Williams: Yes. Hi thanks, Simon. We're going to try and get one last question in here real quick. So, please one question only.

Speaker Change #160: I do not expect that to change, although that's with new entrants or traditional competitors that exist in each of our categories.

We're going to try and get one last question in here real quick.

And our final question comes from Stephen Fox with Fox Advisors. Yeah, thanks for squeezing me, and I assume the only reason Rob is retiring because he has a big book deal coming or something, but congrats. So I guess just for my one question, I mean there's been, there was a lot of talk in different metrics on pricing, and also a lot of talk in terms of etc.

Operator: And our final question comes from Steven Fox with Fox Advisors.

Steven Fox: Thanks for squeezing me in. I assume the only reason Rob is retiring because he has a big book deal coming or something. But congrats. So I guess just for my one question, I mean, there's been--there was a lot of talk in different metrics on pricing and also a lot of talk in terms of mix, et cetera. I guess from a big-picture standpoint, Jeff, like how do you feel about just available pricing power versus your ability to offset new market entrants or just more competitive entrants on any of your areas of expertise going-forward into next year? It seems like that's going to come up a couple of times. Just wondering if you can summarize it. Thanks.

Speaker Change #161: So if I was to look at commercial PCs, clearly as they...

Speaker Change #162: Refresh is slower and starting than all of us would like. It's a competitive environment today. Any different than it's been over the past 40 years?

Jeff: It's a different than it's been over the past 40 years. The same would be true in consumer, a larger number of competitors there. The consumer market is lagging relative to the commercial market in terms of its performance or its growth. And it's a competitive environment there. If I work my way down through servers, when a large percentage of traditional servers are consumed by a smaller number of customers, the large bits are very competitive. That hasn't changed. I mean, we're seeing the same thing in GPUs. There's a lot more, a lot more participants. And I'd go back to what makes Dell special and why I think we win and continue to win.

Speaker Change #162: The same would be true in consumer, a larger number of competitors there. The consumer market is lagging relative to the commercial market in terms of its performance. It's growth.

I guess from a big picture standpoint Jeff, like how do you feel about just available pricing power versus your ability to offset new market entrance or just more competitive entrance on any of your areas of expertise going forward into next year. It seems like that's going to come up a couple of times. I'm just wondering if you can summarize it. Thanks.

Speaker Change #162: and it's a competitive environment there.

Speaker Change #162: I work my way down through servers when a large percentage of traditional servers are consumed by

Speaker Change #162: A smaller number of customers, the large beds are very competitive. That hasn't changed. I don't expect that to change. And we're seeing the same thing in GPs. There's a lot more in it. A lot more participants.

Jeff: That hasn't changed. I mean, we're seeing the same thing in GPUs. There's a lot more, a lot more participants. And I'd go back to what makes Dell special and why I think we win and continue to win. When is our coverage model? We have the broadest coverage model in technology at combination of our direct sales force, and our partner programs. We're going to continue investing coverage. We're going to continue to broaden our channel programs to cover all customers who want to buy Dell gear, and those who don't know they want to buy Dell gear, it's our job to train them to want to buy Dell gear.

Jeffrey W. Clarke: I'm making an assumption, so I'm going to clarify it. In AI, in GPU?

Steven Fox: Actually, I mean--

Speaker Change #162: and I'd go back to what makes Dell special and why I think we win and continue to win. When it's our coverage model, we have the broadest coverage model, technology, a combination of our direct sales force.

the infrastructure broadly across the portfolio, yeah, yeah, just strategically. Thank you. Well, if you are our industry has always been competitive, I do not expect that to change, whether that's with new entrance or traditional competitors that exist in each of our categories. So if I was to look at commercial PCs, clearly as a refreshed is slower in starting than all of us would like, it's a competitive environment today.

Jeffrey W. Clarke: The infrastructure broadly across the portfolio?

yeah, yeah, just strategically. Thank you. Well, if you are our industry has always been competitive, I do not expect that to change, whether that's with new entrance or traditional competitors that exist in each of our categories. So if I was to look at commercial PCs, clearly as a refreshed is slower in starting than all of us would like, it's a competitive environment today.

Steven Fox: Broadly across the portfolio. Yes, just strategically. Thank you.

Jeffrey W. Clarke: Well, if you--our industry has always been competitive. I do not expect that to change, whether that's with new entrants or traditional competitors that exist in each of our categories. So if I was to look at commercial PCs, clearly as a refresh is slower and starting than all of us would like, it's a competitive environment today, slightly different than it's been over the past 40 years. The same would be true in consumer, a larger number of competitors there. The consumer market is lagging relative to the commercial market in terms of its performance or its growth, and it's a competitive environment there. If I work my way down through servers, when a large percentage of traditional servers are consumed by a smaller number of customers, the large bids are very competitive. That hasn't changed. I don't expect that to change. And we're seeing the same thing in GPUs. There's a lot more in it, a lot more participants. And I'd go back to what makes Dell special and why I think we win and continue to win.

Speaker Change #162: and our partner for a grant.

Speaker Change #162: We're going to continue investing coverage. We're going to continue to broaden our channel programs to cover all customers who want to buy a Dell gear and those who don't know they want to buy Dell gear, it's our job to train them to want to buy Dell gear.

Jeff: I look at the advantages of our supply chain. I think it's unmatched in this industry. It provides this a source of competitive advantage, and we're going to continue to invest in that. It's one of the areas where internally we're applying AI. I think about what we're doing in R&D, the particular product categories that I described, the investments that we are making in all of these categories keep us competitive, and in many cases we're a leader. I think we're the leader in commercial PC Revenant, we're the market leader in displays, we're the market leader in work stations, we're the market leader in traditional servers, we're the market leader in storage, we're the market leader in data protection. I could go on, we have a number of number ones and we're going to continue to invest to differentiate and win in those categories.

Speaker Change #162: I look at the advantages of our supply chain.

Speaker Change #162: I think it's unmatched in this industry.

Speaker Change #162: Uh, it provides this a source of competitive advantage, and we're going to continue to invest in it. It's one of the areas where internally we're playing AI.

Speaker Change #162: I think about what we're doing in R&D, the particular product category that I described. The investments that we are making in all of these categories keep us competitive in a mini-cases were a leader.

Jeff: I think we're the leader in commercial PC Revenant, we're the market leader in displays, we're the market leader in work stations, we're the market leader in traditional servers, we're the market leader in storage, we're the market leader in data protection. I could go on, we have a number of number ones and we're going to continue to invest to differentiate and win in those categories. And then lastly, the fourth thing that we think makes us special and different is we service our own products.

Speaker Change #162: I think we're the more leader in commercial PC revenue, we're the market leader in displays, we're the market leader in

Speaker Change #162: Workstations were the market leader and traditional servers, were the market leader and storage, were the market leader and data protection. I could go on, we have a number of number ones and we're going to continue to invest to differentiate and win in those categories.

That hasn't changed. I mean, we're seeing the same thing in GPUs. There's a lot more, a lot more participants. And I'd go back to what makes Dell special and why I think we win and continue to win.

Speaker Change #162: and then lastly, the fourth thing that we think makes us special and different is, we service our own products, we take care of our customers and we're expanding those services.

Jeffrey W. Clarke: One is our coverage model. We have the broadest coverage model in technology, a combination of our direct sales force, and our partner programs. We're going to continue to invest in coverage. We're going to continue to broaden our channel programs to cover all customers who want to buy DellGear. And those who don't know they want to buy DellGear, it's our job to train them to want to buy DellGear. I look at the advantages of our supply-chain. I think it's unmatched in this industry. It provides us a source of competitive advantage and we're continuing to invest in that. It's one of the areas where internally we're applying AI. I think about what we're doing in R&D, the particular product categories that I described. The investments that we are making in all of these categories keep us competitive and in many cases, we're a leader. I think we're the market leader in commercial PC revenue. We're the market leader in displays. We're the market leader in workstations. We're the market leader in traditional servers. We're the market leader in storage. We're the market leader in data protection. I could go on. We have a number of number ones and we're going to continue to invest to differentiate and win in those categories.

Speaker Change #163: In AI, as I mentioned before, it helped with strategy to help define the infrastructure to help them deploy an implemented and ultimately adopt and scale. We do that broadly across the smallest companies in the world to the largest companies in the world.

Jeff: We take care of our customers and we're expanding those services in AI, as I mentioned before, it helps us strategy to help define the infrastructure to help them deploy and implement it and ultimately adopt and scale. We do that broadly across the smallest companies in the world, to the largest companies in the world. That's who we are, that's what we're going to invest in as we think about the efficiencies that we're driving in our organization, it's to allow us to do those better.

Speaker Change #163: That's who we are. That's what we're going to invest in as we think about the efficiencies that we're driving in our organization. It's too allow us to do those better.

Speaker Change #164: Well, that was about as good a close as I could ask for, so I appreciate that. We look forward to seeing everyone out on the road over the next couple of weeks.

Speaker Change #165: Michael and I bond will be at city next week and Jeff will be a Goldman the week after that. Have a restful Labor Day weekend. Thank you.

Speaker Change #166: This concludes today's conference call. We appreciate your participation. You may disconnect at this time.

I think we're the leader in commercial PC Revenant, we're the market leader in displays, we're the market leader in work stations, we're the market leader in traditional servers, we're the market leader in storage, we're the market leader in data protection. I could go on, we have a number of number ones and we're going to continue to invest to differentiate and win in those categories.

Speaker Change #166: [inaudible]

Jeffrey W. Clarke: I could go on. We have a number of number ones and we're going to continue to invest to differentiate and win in those categories. And then lastly, the fourth thing that we think makes us special and different is we service our own products. We take care of our customers and we're expanding those services. In AI, as I mentioned before, it helped with strategy to help define the infrastructure to help them deploy and implement and then ultimately adopt and scale. We do that broadly across the smallest companies in the world to the largest companies in the world. That's who we are. That's what we're going to invest in. As we think about the efficiencies that we're driving in our organization, it's to allow us to do those better.

And then lastly, the fourth thing that we think makes us special and different is we service our own products. We take care of our customers and we're expanding those services in AI, as I mentioned before, it helps us strategy to help define the infrastructure to help them deploy and implement it and ultimately adopt and scale. We do that broadly across the smallest companies in the world, to the largest companies in the world. That's who we are, that's what we're going to invest in as we think about the efficiencies that we're driving in our organization, it's to allow us to do those better.

Rob Williams: Well, that was about as good a close as I could ask for, Jeff. Appreciate that. We look forward to seeing everyone out on the road over the next couple of weeks. Michael and Yvonne will be at Citi next week, and Jeff will be at Goldman the week after that. Have a restful Labor Day weekend. Thank you.

Operator: This concludes today's conference call. We appreciate your participation. You may disconnect at this time.

Q2 2025 Dell Technologies Inc Earnings Call

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